56. Own More by Doing Less | Stock Buybacks

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Stock buybacks are all the rage these days. Fuelled by tax cuts, low cost of capital and not a lot of growth opportunities on the horizon, companies have been buying back their shares by the bucketload. In fact, since 2010 there has been $3.5 trillion in shares bought back in the US alone. Buybacks are great for shareholders in theory – one day you owned 5% of the company, the next day you owned 7% without lifting a finger. How good! However, in reality buybacks haven’t always been great for investors or for the companies buying back the shares.

In this episode you will learn:

  • What a buyback is and how it is done
  • The theory behind buybacks
  • Notable examples of recent buybacks – Apple, Boeing, Cisco, ANZ just to name a few
  • Why Australia doesn’t see as many buybacks as other markets
  • The downside of buybacks, including some notable examples of buybacks gone wrong

Stocks and Resources discussed in this episode:

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