Can captial returns and buy back water down the SP over time? - Aussie Stock Forums

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  1. #1

    Default Can captial returns and buy back water down the SP over time?

    In regard to capital returns I am thinking of a company such as ARG who seemed to have delevelop a 'tradition. of a $1 annual captial return on a SP which is currently at $7.16. And there growth, over time, seems reasonable - with fluctuations apparent.

    But with regard to buy backs I understand that the rules set a maximum amount that the company can buy back shares for. If the company has a slow volume turnover, the buy back period is extensive, and their strategy is to wait until shares are avialable at the cheapest possible price beofre buying -- Then it seems to me that the SP will gradually decrease. Then, once the buy-back is over, won't it take a long time for the SP to recover to original levels? And doesn't this work to eveyone's detriment?

    Maybe someone can give an example along these, or contrary, lines along with some explanation.....


  2. #2

    Smile Re: Can captial returns and buy back water down the SP over time?

    I'm a big fan of well timed share buybacks in particular.......It's only the share traders who don't factor in the release of capital or buy backs....expending capital in this way does of course directly take wealth out of the business........you may not see it in the share price as of course investors regard companies who do this well and the day traders seem not to notice.....also with well timed share buybacks, they can often be the best thing a company can do for its share price
    Big Stocks Don't make Big Stock Moves---Lynch

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