Stock Buybacks Surge

I’ve said here many times that I’m not a fan of stock buybacks. I think they’re a waste of shareholder money and I’d much rather see that money flow to shareholders in the form of cash dividends. Unfortunately, the tax code isn’t very helpful in these matters.

Bloomberg notes that share buybacks have surged recently. This year may be the third-highest ever for buybacks. Only 2006 and 2007 were higher. Even Warren Buffett joined in the buyback parade, and just a few days ago, Amgen announced a very large buyback.

Buyback announcements reached $119.8 billion in the third quarter, up 67 percent from a year earlier, as the S&P 500 slumped 14 percent in the biggest drop since the end of 2008, according to data compiled by Birinyi and Bloomberg. Companies spent at least $150.6 billion on their own stock in the three months ending Sept. 30, more than any quarter since the final period in 2007, the data show.

This happens while the market is trading at some of the lowest valuations of the past two decades.

Posted by on November 14th, 2011 at 9:37 am


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