I’ll say it again.
There is nothing wrong with generic share buybacks.
They are just another form of dividends.
A company’s job (any and every company’s job) is to return value to its owners, and broadly, there are three ways of doing that, growth, dividends or buybacks.
But when a company, even a healthy company like Apple buys back shares in a manner that is so disproportionate to its earnings or balance sheet, there is something wrong.
As of 12/31/2023 Apple had a decent balance sheet,
but still, its balance sheet showed
(on $85b in cash and other current assets)
Apple could have paid off 100% of its liabilities and been left with $33b in cash.
Apple could have limited its buyback to, I dunno, 50% of its net income.
Apple could have limited its buyback to, I dunno, 50% of its tangible net worth.
Nope, this stinks somehow. We have not heard the last of it.
Take the cash out before the foundation crumbles. It would be interesting to learn who’s shares get purchased in the buy back.
I don’t think it works that way.
They just buy on the open market.
Throw $1b into the market and buy how ever many shares from whomever.
Throw another $1b into the market and do it again.
Repeat x50.
.
.
.
It would, however, be fortuitous to buy $AAPL calls a day or two before they they start buying. (Timing is everything.)
Here is a m/l random list (of the subset of companies that use share buybacks) for comparison:
I think it is safe to say at least, that any company giving back a huge portion of its earnings is not a growth company and possibly might be hiding something, manipulating the share price etc…
.
.
.
Is the purpose of a company to give pass-thru loans?
From the fed to the banks to the shareholders?
If that’s the point why even bother making widgets, and selling stuff?
That’s like having the Fed print money and put it into peoples’ pension funds (IOW a tulip bubble.)
