Buyback Binge That’s Besting Capex Pays Off Big (FOR NOW) in U.S. Stocks

The biggest use of cash among S&P 500 companies is making their public footprints smaller — a strategy that’s paid dividends in 2018.According to Goldman Sachs, aggregate share repurchases (or buybacks) rose by nearly 50 percent to $384 billion in the first half of 2018. That tops the $341 billion spent on capital expenditures, which…

Buybacks: Short-term Boost vs. Long-Term Shareholder Value — As You Sow

We highly recommend this excellent report from As You Sow on buybacks. We share their concern about this poorly timed diversion of corporate assets for short-term gains. An excerpt below (emphasis ours): When a company has too much cash its executives and directors puzzle the question: What should we do with the money? Should we…

‘Eye-popping’ payouts for CEOs follow Trump’s tax cuts – POLITICO

Some of the biggest winners from President Donald Trump’s new tax law are corporate executives who have reaped gains as their companies buy back a record amount of stock, a practice that rewards shareholders by boosting the value of existing shares.A POLITICO review of data disclosed in Securities and Exchange Commission filings shows the executives,…

Are Stock Buybacks Starving the Economy?  – The Atlantic

Stock buybacks are eating the world. The once illegal practice of companies purchasing their own shares is pulling money away from employee compensation, research and development, and other corporate priorities—with potentially sweeping effects on business dynamism, income and wealth inequality, working-class economic stagnation, and the country’s growth rate. Evidence for that conclusion comes from a…

Roosevelt Institute Calls on Walmart to Redirect Buyback Cash to Wages

Roosevelt Institute’s new report is Making the Case: How Ending Walmart’s Stock Buyback Program would Help to Fix our High-Profit, Low-Wage Economy. Walmart—as our country’s largest retailer and the largest private employer of women and black and Latinx workers—is a tremendous force in our economy. Today, however, the starting wage its associates earn still falls…

Marco Rubio: Tax Bill ‘Probably Went Too Far’ On Corporate Handouts | HuffPost

[Senator Marco] Rubio expressed his reservations [about the Tax Legislation] in an interview with southwest Florida’s News-Press Thursday, noting he thinks Republicans probably gave corporations too much of a handout.“<P><P>If I were king for a day, this tax bill would have looked different,” he said. “I thought we probably went too far on [helping] corporations.”The…

Bad Buybacks Can Destroy Shareholder Value

David Trainer echoes our concerns about buybacks and makes a good point — with specific examples — about the misaligned incentives that lead to what he calls “bad buybacks.” In theory, share buybacks are an efficient mechanism for companies to return cash to shareholders when they believe the stock is undervalued and have more cash…