Operating at the Intersection of Technology and the Capital Markets
Tag: share repurchases
The WSJ reports that companies have announced $600 billion of share repurchase authorizations year-to-date. What percentage of that total authorization will be executed? The proof is in the pudding as they say and a share repurchase press release means zero until the company in question starts to execute on the authorization. Announcing share repurchase authorizations … Continue reading How Much of That Share Repurchase Authorization Will Be Executed?
Get ready for an uptick in share repurchase plan announcements. This earnings season as Technology companies issue weak guidance you can be sure that many of those companies will announce new share repurchase agreements to support stock prices. Share repurchase agreements are a waste of capital in my view. CEOs should invest in their businesses … Continue reading Weak Earnings & Buybacks
Prior to the 2008-2009 Financial crisis, stock buybacks were typically used by management teams to offset options dilution and to acquire undervalued company shares. Today, companies primarily use stock buybacks to goose the value of CEO options packages as well as to goose the value of shares held by CEOs and large institutional holders. The … Continue reading The Stock Buyback Scam
Technology company earnings season is in high gear. It is a heck of a time to be a Technology fund PM or Analyst. Despite the NASDAQ Composite being down 13% YTD, the group has another 40% downside or more in our view. Many of the high-multiple of revenue (no earnings) stocks have 80-90% downside as … Continue reading Tech Earnings Season Is Here
Share buybacks are back above pre-COVID levels. Frequent readers of these pages know that we are generally not in favor of share buybacks. Buyback activity has exploded since 2009 when the Fed began its low interest rate and QE monetary policy to artificially prop up equity and credit markets during the financial crisis. Public companies … Continue reading Share Buybacks Accelerate
One news item that caught our eye this week was that the Office of the Comptroller of the Currency (a division of Treasury) wants banks to extend credit to those who lack credit history. Banks plan to share some consumer data with each other in order to build enough history to justify extending credit. Smells … Continue reading Treasury Wants More Consumer Spending
Over the past 11 months and as recently as Tuesday the Federal Reserve has consistently reiterated its mission to get the U.S. Economy back to full employment. We are not there yet. The labor participation rate remains below 2008-2009 financial crisis levels. Let me know your thoughts on the below (particularly if you are on … Continue reading Is The Fed’s View On The Relationship Between Interest Rates and Jobs Wrong?
We prefer dividends, investment in R&D and M&A programs to share repurchases. However, for those companies that include share repurchases as part of their capital allocation strategy, today would be a good day to exercise a portion of that repurchase authorization. Markets hate uncertainty. Markets like it when companies and insiders step-up and buy their … Continue reading Now Would Be A Good Time To Execute That Stock Buyback
It is a corporate governance problem when insiders sell shares in the face of share repurchase programs. Take the example of Copart (ticker: CPRT). CPRT insiders have not purchased any shares over the past several years, yet they have done plenty of selling. Further, CPRT share repurchases helped support the stock while insiders sold (see … Continue reading Insider Selling & Share Repurchases – A Corporate Governance Problem
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