Lootman wrote:The mention of debt there is significant. Some companies actually borrow money to buy back shares. While other companies do buybacks out of earnings and may not even have any debt. The former I regard as a black mark, but the latter can have merit, and I note that even your blanket criticism acknowledges some exceptions. It's best to assess each case on its individual merits rather than make grand generalisations....
Almost all companies operating buybacks have net debt so ""grand generalisations" are wholly apposite here. In any case even if they, rarely, have net cash my comments remain valid. Net debt or net cash, buybacks have a negative effect on the figure. In fact a double blow because both net debt (or net cash) and net assets are hit by a buyback. The special cases to which I was referring are sufficiently rare or of such minor scale to be ignored in the general view that buybacks stink.
...As for whether you can call it "yield" or not, that is another matter. But I don't think that it matters so much. One can posit different kinds of yield, e.g. dividend yield, earnings yield, buyback yield and so on. As long as the word is qualified and its meaning is clear, then the rest is just semantics...
You don't seem to be aware of the fact, or more likely are being disingenuous, that the term "yield" on its own is normally understood here, in the original message, and everywhere else to mean dividend yield. One cannot "posit" anything else so I guess that you are trying to be argumentative for the sake of it.
...There are some types of situation where I like buybacks. One would be where I seek to avoid or defer the income tax I'd have to pay on dividends. Another is a case where a company is spinning off excess cash (like some tech companies) and the alternative would be a dubious acquisition. And a company in a sustained growth pattern will profit from extra operational gearing...
Very odd. This is the HYP board, not some general share trading board. You claim you'd rather lose a dividend in order to save tax, even though after tax you still derive some net income, in favour of a buyback from which you cannot derive any benefit and on the contrary will suffer as gearing and risk increases. As I said earlier it beats me that a HYPer would think this but again I suspect you don't really believe it and again are just trying to make sport here.
