Share Buybacks Down Plus Five Picks

Although share buybacks boost earnings-per-share for investors, companies are slowing it down of late, writes Validea CEO John Reese in a recent article for Nasdaq. Reese cites a recent Barron’s article that says: “As with many games, this one has gone on for too long, as companies borrowed heaps of cash not to fund future growth, but to reduce their share count even further.” One reason for the slowdown, Reese says, is that share valuations are higher. “The move only makes sense,” writes Reese, “if the shares are being repurchased at a reasonable price.” Using stock screening models he created […]

Key Pillar of the Market – Share Buybacks – Could be at Risk

Rock-bottom interest rates allow the market to stay higher for longer than it would otherwise, writes Steven Russolillo in this week’s Wall Street Journal. One factor that could end the party, however, is the amount of cash companies are paying out to investors. Not surprisingly, robust dividend payments and buybacks are big draws for investor dollars. However, the article quotes New York University professor Aswath Damodaran as saying, “This is the weakest link in the market. He says, “the inability of companies to sustain large cash payouts to investors will cause the next downturn.” During the first two quarters of […]

Reese on Buffett’s “Buy-and-Hope-It-Languishes” Approach

In his latest column for Forbes.com, Validea CEO John Reese explains why Warren Buffett sometimes hopes his stocks languish — and why you should too. “If you are investing in a firm that is in the middle of a share buyback plan, you should root against the stock in the short-term (so long as its underlying business remains strong),” Reese writes, echoing what Buffett said in his 2011 year-end letter to shareholders. “That way, the company can get a better deal on the shares that it buys back, and you as a shareholder get a bigger cut (because there are fewer outstanding […]