A research study published last year in the Financial Analysts Journal found that net buybacks account for the bulk of the intermediate- and longer-term differences in stock market returns around the world. This according to a recent Wall Street Journalarticle by columnist Mark Hulbert. “This comes as a surprise,” Hulbert writes, “because the conventional wisdom is that economic growth is by far the most important factor in the outperformance of certain countries’ stock markets in… Read More
An article in The Wall Street Journal reports that Berkshire Hathaway repurchased $928 million in stock in the third quarter of 2018, calling it a rare move that indicated Chairman Warren Buffett sees a dearth of appealing investment options for his company’s large cash balances. This is the first repurchase since 2012, the article says, reflecting the “the scarcity of attractively priced projects and deals that can satiate yield-hungry investors and firms more than nine… Read More
Although share buybacks boost earnings-per-share for investors, companies are slowing it down of late, writes Validea CEO John Reese in a recent article for Nasdaq. Reese cites a recent Barron’s article that says: “As with many games, this one has gone on for too long, as companies borrowed heaps of cash not to fund future growth, but to reduce their share count even further.” One reason for the slowdown, Reese says, is that share valuations… Read More
Rock-bottom interest rates allow the market to stay higher for longer than it would otherwise, writes Steven Russolillo in this week’s Wall Street Journal. One factor that could end the party, however, is the amount of cash companies are paying out to investors. Not surprisingly, robust dividend payments and buybacks are big draws for investor dollars. However, the article quotes New York University professor Aswath Damodaran as saying, “This is the weakest link in the… Read More
A myriad of companies in recent years have touted the fact that they’ve been buying back their own shares to increase shareholder value. But in a recent piece for Forbes.com, Validea CEO John P. Reese says that all buybacks aren’t created equal.
In his latest column for Forbes.com, Validea CEO John Reese explains why Warren Buffett sometimes hopes his stocks languish — and why you should too. “If you are investing in a firm that is in the middle of a share buyback plan, you should root against the stock in the short-term (so long as its underlying business remains strong),” Reese writes, echoing what Buffett said in his 2011 year-end letter to shareholders. “That way, the company can… Read More