I know the buybacks often get touted as a good reason to buy a stock but I am not really a fan especially when they do it on the back of new debt. Maybe I am old school but I would rather see them pay down debt, raise the dividend, invest in the business, build a cash position or pay their workers a bit more. The exception is Apple and a few other companies with a strong balance sheet.
I read something a while back about stock buybacks. The article was saying something about how stock buybacks where how CEO's and board members where able to manipulate stock price to get their compensation.
I think it went something like this,
The CEO and others, are paid mainly by stock. In order to realize that compensation in dollars they have to sell the stock. It never looks good to see board members dumping stock. Also, dumping stock negatively affects stock prices. So, they set automatic stock sells quarterly, monthly or what ever they see fit. If it's an automatic sell, then there is no reason for concern from other shareholders. But they still need a buyer of that stock. So, what could be better than to have your automatic scheduled sells, selling to automatic scheduled buys from the very company you are running.
Buybacks, also reduce the number of shares outstanding, therefore making the company's earnings per share look better, making the CEO and others look better and usually, their compensation is performance based. So it's a win win for those who get paid with stock. It's a crooked system
They should be spending that money on cap ex, and employees and making the company better.
They're eating the Penguins, they're eating the seals...
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