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| Subject: Stock Buybacks In some countries, including the United States and the United Kingdom, corporations can buy back their own stock in a share repurchase, also known as a stock repurchase or share buyback. There has been a meteoric rise in the use of share repurchases in the U.S. in the past twenty years, from $5b in 1980 to $349b in 2005. A share repurchase distributes cash to existing shareholders in exchange for a fraction of the firm’s outstanding equity. That is, cash is exchanged for a reduction in the number of shares outstanding. The firm either retires the shares or keeps them as treasury stock, available for re-issuance. Under U.S. corporate law there are five primary methods of stock repurchase: open market, private negotiations, repurchase put rights, and two variants of self-tender repurchase, a fixed price tender offer and a Dutch auction. (Wikipedia Feb 2010) The Post Stock Buyback Era By John Schroy, on April 19th, 2009 |  Leave a comment  The Crash of 2008 signaled a turning point in capital markets. The stock buyback era seemed to have ended. The Efficient Market Hypothesis was discredited. The inability of market experts and major institutions to place a fair value on thousands of securities indicated basic problems in security analysis and the handling of freely available information. This article describes new challenges facing fundamental security analysts in the early 21st century, and the consequent opportunities. April 19th, 2009 | Print Article |  Email Article |  Topics: Auction Market Preferred Shares, Barack Obama, Barings Bank, beta, Bloomberg, Citicorp, common stock legend, complexity, covariance, efficient market hypothesis, Federal Reserve Bank, Fitch, Graham & Dodd, Inflation, Lehman Brothers, Moody's, Morningstar, Nick Leeson, SEC Rule 10b-18, Standard & Poor's, Stock Buybacks, Technical Analysis, Thomson's, US SEC | Category: New Economic Theory | Leave a comment |  Short urlHard Times By John Schroy, on April 17th, 2009 | One comment  The Crash of 2008 was the end to what I call, “the old capital markets”. A new era is beginning, but form and detail are hidden in the mists of change. It may be a decade or so before new structures and directions are visible. Many were thrown out of work by the Crash, but before getting into the unpleasant chore of actually looking for a job, you should consider whether or not you even want to work in the new capital markets. April 17th, 2009 | Print Article | Email Article | Topics: Adam Smith, back office, Bank of America, Bear Stearns, Bernard Madoff, book-entry settlement, Brazil, Capital Market Wiki, Citicorp, computerized trading, Edinburgh, FASB Statement 157, hedge funds, Hong Kong, Lehman Brothers, London, Margaret Thatcher, Merrill Lynch, New York City, SEC Rule 10b-18, Shanghai, Singapore, Stock Buybacks, unemployment | Category: World Economy | One comment | Short urlAssessing the damage By John Schroy, on April 14th, 2009 | Leave a comment  The buyback era began in 1982 when the US Securities and Exchange Commission promulgated Rule 10b-18, granting “safe harbor” to corporations that wished to use equity repurchases to boost market prices in order to give value to executive option schemes. The total value of corporate buybacks since SEC Rule 10b-18, in 2008 dollars, is estimated at $5.77 trillion. Buybacks have been funded not only from profits, but by raiding depreciation reserves and borrowing from banks. April 14th, 2009 | Print Article | Email Article | Topics: Barack Obama, Bernard Madoff, Capital Market Wiki, common stock legend, dividends, fraud, Morningstar, Ronald Reagan, SEC Rule 10b-18, Stock Buybacks, unemployment, US SEC, US taxation | Category: Stock Buybacks, featured | Leave a comment | Short urlFeatured articles on inside pages
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