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Old 10-06-2020, 12:27 PM   #5621
Leondros
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Join Date: Mar 2011
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Quote:
Originally Posted by Bill Bumface View Post
Disagree. While yes, buybacks can be totally benign in some scenarios, we now see buybacks at levels never seen before across industries.

This indicates that capital is so plentiful, that businesses can't keep up with allocating capital to their core value creation streams. It's a cheaper/easier lever to pop numbers for quarterly reports to make the execs look good. The whole point of capitalism is that capital gets allocated to value creation, and value creation has a side effect of job creation. The entire system is so slanted toward corporations right now that they have to find a way to basically dispose of their excess capital.
Or in the case of oil and gas companies, its a better return on investment for the company to buy back its shares than to execute some of their capital projects due to economics. Many Canadian O&G companies simply have better returns by utilizing free cash flow to purchase shares and return that value to shareholders than to start projects based on the economics on a full cycle basis.
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