Stockbuybacks Are Not Always Good

[The W all Street Journal Interactive Edition] July 7, 1997 Buybacks Arent Always A Good Sign for Investors By SUZANNE MCGEE and GREG IP Staff Reporters of THE groyne STREET JOURNAL Bullish about stocks after all those big share repurchases that have been announced? Think again. Companies stay fresh to produce share-buyback devises at a torrid pace: So far this year, they have stated their intentions of removing as much as $87.3 billion of stock from the market, according to Securities Data Co. That comes hard on the heels of the $176.7 billion in stock repurchases announced last year. These buybacks, on with merger and acquisition activity, are eating away at the amount of stock available to investors. That, in the eyes of more stock-market analysts, is one of the main causes of the current bull market, which saw the Dow Jones industrial Average soar 100.43 points to a new record of 7895.81 in Thursdays holiday-shortened session. But not all buybacks are created equal. duration buybacks as a whole have helped boost returns to stock-market investors as a class, companies dont always use them just to face that their stock is undervalued, or to distri savee excess cash to shareholders, skeptics say.

It has locomote increasingly important for prudent investors to sort through the sparking plug surrounding individual share-repurchase plans to determine the reasons behind the buyback. Only whence can they figure out whether a repurchase plan is a sign to buy -- or to avoid the stock. The Options factor out For one thing, companies are more active in acquire back shares to offset growing numbers of options they are military issue to their employees. The focus has been on the buybacks, but in many cases we as investors have simply been overlooking the other side of the equation, says Tim Morris, executive vice president of Bessemer Trust Co., a New York base money-management firm. Yes, its interesting if a company has been buying back its shares, but if with the other... If you want to get a full essay, order it on our website: Orderessay

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