Buybacks at $46B a Month Dwarf Everything in U.S. Market (2015)

Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by phamilton on Monday April 04, 2016 @01:19PM (#11423598)

Yep. Except for the fact that without taxes the investor can just sell the stock if they disagree with the investments the company is making, resulting in the same cash return as a dividend.

In my example with the buyback, if the investor sold 0.11% of the company after the buyback, the result would look just like what would happen if they did not reinvest the dividend. 1% of the company and $10k cash.

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by rsp1984 on Monday April 04, 2016 @02:19PM (#11424071)

Ok, but it's not the buy-back that increases the per-share value for the selling investor, it's the fact that the company has generated positive Free Cash Flow that it is free to invest.

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Re:Buybacks at $46B a Month Dwarf Everything in U.S. Market ... by phamilton on Monday April 04, 2016 @07:38PM (#11426661)

True, though investors often discount cash on hand ("a bird in the hand is worth two in the bush") because of the uncertainty of ever seeing that money. YHOO is probably the easiest example as of late, with their massive goodwill write downs of acquisitions. So the act of either a dividend or a buyback removes that uncertainty and can result in an increase in per share value.

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