However, the
management understands better than any one about the value of the
company. They buy back due to a good value with respect to how to use
the company's cash such as giving dividends, plowing back to
research/development... They also in theory consider the total return of
the investor (tax rates...).
Most officers take
care of themselves first: How to boost the value of their stock options.
In last several years, boosting dividends have proven to raise the
stock price.
If
the number of the outstanding shares has been reduced, many metrics with
earning per share will be improved such as P/E. If the company borrows
money to buy its stock, the metrics on debts will head to the other direction.
One's two cents.
Order one of the following books for the entire article: The Art of
Investing, Debunk the Myths in Investing: Final Version or Buffettology
available from Amazon.com.
Click
here or type
http://www.amazon.com/dp/B00MHU70D6
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