The Folly of Stock Buybacks-Part II

July 20th, 2010 by hackel Leave a reply »

There have been more than a few stories making the rounds advocating share repurchases, in which the authors attempt to make the point that firms which repurchase their shares tend to outperform the general market.

What do Bear Stearns, Freddie Mac, Lehman and Station Casinos have in common? Their executives believed they were so well-funded they began very large buyback programs, even though they borrowed to do so.



1 comment

  1. John Schroy says:

    That issuers the use stock buybacks outperform the market is far from an accurate statement. A recent study by Mike Gumport ( ) shows that stock buybacks are still bad for investors, as has been the case for many years.

    Unfortunately, neither the SEC that promulgated Rule 10b-18 in 1983 giving safe harbor to stock buyback manipulators, nor the brokers or corporate execs that benefit from this rule have any interest in having the truth divulged.