- I applaud the majority of the 7 comments above which see stock buybacks programs as seriously flawed.
To see how bad stock buybacks compare to investments visit “The Net Profit Test” (https://corequity.blogspot.com/2016_04_01_archive.html) and you will see a graph that compares the annualized returns from buybacks to investments.
From the perspective of the Shareholder (vs the share seller), Buyback returns are simple interest vs compounding from investing.
CEOs that buyback their company’s shares are admitting that they don’t know how to invest the cash profitably. One would think that would be their most important responsibility.
Our universe of stocks outperformed the S&P by 4.2% last month while the Undervalued Screen gained 6.5% relative. The Overvalued were equal to the universe’s return of 4.2% mainly due to the superior performance of the Energy stocks which numbered 15 out of 26 in the screen.
The Overvalued ended the month on a strong note gaining 2.4% in the last week.
(c) 2016 Robert L. Colby
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