Originally Posted by
Big E 757
If outstanding shares are bought up from the open market by the company, basically removing those shares from circulation, it increases the value of the existing shares in shareholder pockets, thus giving them money, by virtue of the value increase.
In other words, Wall Street looks at earnings per share and determines the value of each share of stock by how much each share of the company earns per quarter/per year. If you pull shares out of the pool, each outstanding share has more value. It's a tax free way of saying thanks to the people who buy your shares...until they sell the stock.
I'm not saying this is what happened, I have no idea. I'm just saying there are other ways to give money to shareholders than just divedends.
Stock buy backs are a scam.
Look at Deltas cash position in the early 2000. I think they had 4B cash and some CFO did a buy back of 1B and in a month the price was even lower than when the buyback happened. 1B literally evaporated.
Instead of rewarding share owners in the long run (like dividends) they temporarily bump up the stock price which most likely benifits the few owners with many many shares, usually granted through stock options, like the executives.
The scam usually doesn't result in any long term gains, and the executives know this, so you can expect to see insider selling.
What this really does (if this is where money went) is take money off the books so the company doesn't look so attractive to a potential buyer who would pay for our purchase with our own cash in the bank.