Barry and I sat down with Ed Yardeni of Yardeni Research to bring some data to the buyback conversation. This was a nice counter to the discussion we had earlier this week with Ben Hunt.
While they disagree on the implications about buybacks, they agree about one big thing, which Yardeni wrote about in his book Stock Buybacks: The True Story:
Most companies don’t view buybacks as a means of returning cash to shareholders, but rather, as a means of offsetting all or most of the dilution caused by stock ownership.
Hunt thinks that this is “the rake” that management is taking out of the company and away from shareholders. Yardeni says that this is simply a form of compensation, and that it’s not just management who is receiving shares.
I don’t think we’re ever going to settle this matter, but this was an interesting conversation which you can check out below.
- The data is wrong
- This data, specifically
- The alternative to buybacks
- R&D and Capital Spending
- S&P 500 Buybacks and Dividends
For more of Ed’s research, visit Yardeni.com