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overtheedge
Member since May 2012
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Corporations Are Liquidating Themselves, One Buyback At A Time - John Rubino - Dollar Collapse

There is an alternate hypothesis as to why the massive share buy-backs.

Begin with the assumption that the corporation is expected to have a much reduced revenue stream.
This could possibly result in bankruptcy.
Enter stock buy-backs with current cash assets and large scale borrowing.
Result? Large scale asset stripping by the shareholders before the ax falls.

Think about the increased debt, reduced cash with little to no increase in manufacturing capability.
Think about the probability that this recession(?) could last a lot longer and even become far worse.
If a corporation is going to fail, why not distribute as much monetary assets as possible to the shareholders in keeping with the fiduciary responsibility to maximize shareholder value.

Those that retain their shares may or may not have increased value to their shares.
Some have a higher risk tolerance. And some are managing your money. Who will be the greatest loser?

Commented 3074 days ago

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Beginning of the headline :In every bubble there are trends so obviously crazy that it's hard to see how anyone, let alone mainstream money managers, can buy in. And yet buy in they do. This time around there are almost too many such trends to count. But perhaps the most obvious is corporate share repurchases. Though already a well-known and much lamented practice, it has yet to send hot money running for the exits or spawn a regulatory backlash. But it has generated some good analysis from mainstream news org... Read More

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