Originally Posted by
TheManager
Recently, Alaska annouced a stock buy back program and or split???. If I remember correctly, someone had explained how that makes it less expensive/easier to purchase as they accumulate more of their own shares.
I did not pay attention to it at the time and don't have time to research it. Running kids off to practice.
ACL.. can you chime in if its so? You and Bar are sharp on these issues.
A stock buy back makes the remaining outstanding shares worth more. For example.. Let's say you have 100 shares that represent 50% of the outstanding shares of a company. That would mean that there are 200 shares outstanding. If the company buys back 50 shares, your shares are now worth 67% of the company. If the company is earning $2000 or (EPS of $10/share) prior to the buyback, the earnings on your shares are now higher ($13.33) because the share pool has been reduced. Your stake in the company is now worth much much more. Warren Buffett 101. Value investing. He LOVES stock buybacks of companies he owns.