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A comment on “Buy and Hold” No More: The Resurgence of Active Trading. Parent comment
Initially:
market cap = $100
book value = $20
discounted future cash flows = $80
share price = $1
number of outstanding shares = 100
After the buyback:
market cap = $99
book value = $19
number of outstanding shares = 99
So the market cap didn't change.
I agree it's effectively the same as dividends (although I think buybacks are slightly better for the taxes of stockholders).
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Initially:
market cap = $100
book value = $20
discounted future cash flows = $80
share price = $1
number of outstanding shares = 100
After the buyback:
market cap = $99
book value = $19
discounted future cash flows = $80
share price = $1
number of outstanding shares = 99
So the market cap didn't change.
I agree it's effectively the same as dividends (although I think buybacks are slightly better for the taxes of stockholders).