Apple's $62.9 billion stock buyback program called a bad investment in new report

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  • Reply 21 of 152
    Who gives a flying hoot whether it was good or bad for Apple. Stealing poor people's healthcare and giving the money to the rich was horrendous public policy.

    We were promised increased investment, not stock buybacks for Apple shareholders. That didn't happen.
    Who made you this promise? How is Healthcare for the poor related to stock buyback - I think you out of yo f*ng mind! Maybe you caught an on ramp when it should’ve been off.
  • Reply 22 of 152
    melgross said:
    What happens is that the money goes down a black hole, while there’s no evidence that shares go up at all.
    Since the whole idea of a buyback was pushed by activists David Einhorn and Carl Icahn (unless I’m misremembering my history here), the real purpose behind the buybacks was probably to manipulate the Apple board of directors into making conditions more favorable to their interests. As I’ve heard people say before, dividends (and similarly, buybacks) are what companies do when they have no idea what to do with their money.
    edited December 2018 elijahgbaconstang
  • Reply 23 of 152
    flydogflydog Posts: 1,123member
    melgross said:
    What happens is that the money goes down a black hole, while there’s no evidence that shares go up at all.
    Perhaps you're not familiar with the principle of supply and demand.  When there is less supply or more demand, the price goes up because buyers are competing for fewer shares.  This is taught the first day of any high school economics. 

    In addition, financial ratios such as price to boo, price to earnings, price to cash flow, etc become more favorable.

    Finally, do you really think any company would throw money into a black hole?

    The good news is that you appear qualified to be the next Chairman of the Federal Reserve.
    edited December 2018 elijahgbaconstang
  • Reply 24 of 152
    flydogflydog Posts: 1,123member

    Who gives a flying hoot whether it was good or bad for Apple. Stealing poor people's healthcare and giving the money to the rich was horrendous public policy.

    We were promised increased investment, not stock buybacks for Apple shareholders. That didn't happen.
    That promise was made by an orange-haired clown, and should have been the first clue that it likely wouldn't pan out.
    GeorgeBMacbaconstang
  • Reply 25 of 152
    flydogflydog Posts: 1,123member

    jasenj1 said:
    As an AAPL owner, I can't say that I've seen any benefit from the buy backs. My understanding is that buy backs are supposed to increase the value of the remaining shares. But AAPL continues to be volatile and be manipulated by analyst "news". Maybe my dividend has increased - I haven't watched it closely; I'm sure there's a chart out there somewhere that could show dividend vs shares outstanding or some such, and hopefully the buy backs would show a real impact there. Anyone have a link to a "here's why the buy backs were good for AAPL owners" article?
    Stock is traded on an open market, so no you would not see a direct benefit, but being an open market, the less supply the higher that buyers must bid to obtain the stock. 
    baconstangradarthekat
  • Reply 26 of 152
    flydogflydog Posts: 1,123member

    davgreg said:
    Buybacks only make sense if you are getting fees from the transaction. 

    If you do the math and figure in all the impacts, paying a special dividend would be a better use if the intent was to return money to shareholders.
    Except dividends are taxed, must be taken as cash, and are not reinvested.  No thanks, I'd rather see my capital grow. 
    edited December 2018 baconstangradarthekat
  • Reply 27 of 152
    larryjwlarryjw Posts: 1,031member
    crowley said:
    jasenj1 said:
    My understanding is that buy backs are supposed to increase the value of the remaining shares. 
    No, obviously not, otherwise companies would just buy back shares all the time.  The only way to increase the value of shares it to get the market to recognise increasing value in the company.  What share buy backs do is express a clear signal of the company's faith that the shares are undervalued, and therefore worth buying.

    If the market believes the company (and all other things being equal), then more people want to buy shares, and the share value goes up.  If the market doesn't believe the company, or if other things (like for example, an idiot president) happen, then the share value may go down.

    Analysts saying it's a bad investment are day trading idiots who think that because they have the privilege of hindsight, they are somehow geniuses.  Given Apple's P/E it was a fine investment, that has been undercut in the short term by political events. 
    A buyback itself decreases the cash assets or increases the liabilities of the company, either because they buy the shares on the open market with available cash, or as Apple had done before repatriating money from overseas, they took on debt to buy the shares back. 

    In theory, if the stock they bought was worth what they paid for it, the transaction was a wash -- they traded the cash asset for a stock asset. If the company was worth what the outstanding stock said it was worth, then it was still worth that amount after the buyback. Then retiring the bought-back shares merely allocated the company's worth to a lesser number of shares, making each outstanding share worth more. 
    baconstang
  • Reply 28 of 152
    hexclockhexclock Posts: 1,253member
    Who gives a flying hoot whether it was good or bad for Apple. Stealing poor people's healthcare and giving the money to the rich was horrendous public policy.

    We were promised increased investment, not stock buybacks for Apple shareholders. That didn't happen.
    Oh yeah? Stealing my entire tax return three years straight because I didn’t have (or need) health insurance was a pretty horrendous policy as well, which thankfully, has ended. 
  • Reply 29 of 152
    hexclockhexclock Posts: 1,253member
    flydog said:

    davgreg said:
    Buybacks only make sense if you are getting fees from the transaction. 

    If you do the math and figure in all the impacts, paying a special dividend would be a better use if the intent was to return money to shareholders.
    Except dividends are taxed, must be taken as cash, and are not reinvested.  No thanks, I'd rather see my capital grow. 
    Dividends can be reinvested. I do it all the time. 
    SpamSandwichrainmaker
  • Reply 30 of 152
    gatorguygatorguy Posts: 24,213member
    larryjw said:
    crowley said:
    jasenj1 said:
    My understanding is that buy backs are supposed to increase the value of the remaining shares. 
    No, obviously not, otherwise companies would just buy back shares all the time.  The only way to increase the value of shares it to get the market to recognise increasing value in the company.  What share buy backs do is express a clear signal of the company's faith that the shares are undervalued, and therefore worth buying.

    If the market believes the company (and all other things being equal), then more people want to buy shares, and the share value goes up.  If the market doesn't believe the company, or if other things (like for example, an idiot president) happen, then the share value may go down.

    Analysts saying it's a bad investment are day trading idiots who think that because they have the privilege of hindsight, they are somehow geniuses.  Given Apple's P/E it was a fine investment, that has been undercut in the short term by political events. 

    In theory, if the stock they bought was worth what they paid for it, the transaction was a wash -- they traded the cash asset for a stock asset. 
    Except that's not what Apple did. There was no asset trade, ie a share of stock, when Apple repurchased it. That share was retired, burned, and buried. It has no remaining book value. The money was spent in what amounts to an attempt to artificially manipulate the stock value, and each member of the executive management team reaps significant personal benefits monetarily from it. 
    edited December 2018 GeorgeBMac
  • Reply 31 of 152
    Yet another perspective. If Apple really believed their stock price would drop so much they obviously would have waited. So, my take is that Apple knows something about the performance of their company that the pundits, short-sellers and pre-programmed computer algorithms do not: i.e; they actually project that this will be a ggod quarter, and they bought back the stock at values commensurate withat projected performance. They, like everyone else, got slammed by the dumb set of policies from our White House that sent everyone into a fenzued panic. Trade wars, government shutdowns, ludicrous attacks on the Federal Reserve (all happening at once) caught everyone (even Trump) by surprise. So, if you are an investor, buckle up and wait.  I believe it is going to be a fabulous quarter. Of course, sharing a bit of the dividend savings with loyal investors would be nice as well.  Even a special one-time dividend of $10 per share for all loyal shareholders who rode out the storm, would be nice as well.  Let’s say all shareholders of record on Christmas day.
    baconstangradarthekat
  • Reply 32 of 152
    chasmchasm Posts: 3,302member
    jasenj1 said:
    Maybe my dividend has increased - I haven't watched it closely.
    This isn’t rocket science: it’s a simple search engine query.

    I’m rounding a bit here, but since 2014 the typical quarterly dividend per share has gone up from 47 cents to 73 cents nowadays. I’m bad at math, but that’s about a 60 percent increase over four years.

    I have no idea how that compares to the rest of the market, but it seems like a nice bonus on top of the growth of the stock price (even at the moment, shares are up around 85 percent from four years ago).
    baconstang
  • Reply 33 of 152
    chasmchasm Posts: 3,302member
    My opinion on this story (not the writer; the sources for this story): idiots.
    baconstangradarthekatrainmaker
  • Reply 34 of 152
    tmaytmay Posts: 6,334member
    gatorguy said:
    larryjw said:
    crowley said:
    jasenj1 said:
    My understanding is that buy backs are supposed to increase the value of the remaining shares. 
    No, obviously not, otherwise companies would just buy back shares all the time.  The only way to increase the value of shares it to get the market to recognise increasing value in the company.  What share buy backs do is express a clear signal of the company's faith that the shares are undervalued, and therefore worth buying.

    If the market believes the company (and all other things being equal), then more people want to buy shares, and the share value goes up.  If the market doesn't believe the company, or if other things (like for example, an idiot president) happen, then the share value may go down.

    Analysts saying it's a bad investment are day trading idiots who think that because they have the privilege of hindsight, they are somehow geniuses.  Given Apple's P/E it was a fine investment, that has been undercut in the short term by political events. 

    In theory, if the stock they bought was worth what they paid for it, the transaction was a wash -- they traded the cash asset for a stock asset. 
    Except that's not what Apple did. There was no asset trade, ie a share of stock, when Apple repurchased it. That share was retired, burned, and buried. It has no remaining book value. The money was spent in what amounts to an attempt to artificially manipulate the stock value, and each member of the executive management team reaps significant personal benefits monetarily from it. 
    You really went off the rails.
    baconstangradarthekatrainmaker
  • Reply 35 of 152
    What was the opportunity cost of using those funds to buy back their stock? What other investment could they have made instead?
    A buyback is not an investment.   It's a confession that the company doesn't have faith in investing in itself and its own products.   It's essentially a give-away to the stockholders.  

    In this particular case, it was essentially laundering the money from the Tax-Scam:  The U.S. is borrowing $1.5trillion dollars that mostly just got passed through corporations such as Apple to the stockholders. 

    I wonder if those stockholders will return the money when the country declares it has to cut back on Medicare and other programs because it gave away its money to them?
    ihatescreennamesbaconstang
  • Reply 36 of 152
    melgross said:
    What happens is that the money goes down a black hole, while there’s no evidence that shares go up at all.
    Yeh, that's a good point.   The theory is that stock price is based on the current & future value of the company divided by the number of outstanding shares.   But, as stock prices escalate for reasons other than intrinsic corporate value, that becomes less and less true.

    We're seeing an illustration of that this week as stock prices fluctuate wildly based on, well, nobody seems to know or agree.   But none of the fluctuations have anything to do with the intrinsic value of the companies involved.
    baconstangmuthuk_vanalingamradarthekat
  • Reply 37 of 152
    Who gives a flying hoot whether it was good or bad for Apple. Stealing poor people's healthcare and giving the money to the rich was horrendous public policy.

    We were promised increased investment, not stock buybacks for Apple shareholders. That didn't happen.
    What about my healthcare? Why was it OK to steal from the vast majority of the people in order to create an unsustainable giveaway to the insurance lobby? The Federal government should never have gotten tangled up in the gigantic mess that they have created in the healthcare markets.
    Yeh, that would be a problem if it had ever actually happened like that.
    baconstang
  • Reply 38 of 152
    melgross said:
    What happens is that the money goes down a black hole, while there’s no evidence that shares go up at all.
    Since the whole idea of a buyback was pushed by activists David Einhorn and Carl Icahn (unless I’m misremembering my history here), the real purpose behind the buybacks was probably to manipulate the Apple board of directors into making conditions more favorable to their interests. As I’ve heard people say before, dividends (and similarly, buybacks) are what companies do when they have no idea what to do with their money.
    You got it right - the history at least:   The increased payouts to the stockholders were prompted by the activists several years ago .   Prior to that time Apple had been retaining its profits and using them to reinvest in the business.

    But, the massive increase in profits from the tax scam took it to new levels.


    baconstang
  • Reply 39 of 152
    hexclock said:
    Who gives a flying hoot whether it was good or bad for Apple. Stealing poor people's healthcare and giving the money to the rich was horrendous public policy.

    We were promised increased investment, not stock buybacks for Apple shareholders. That didn't happen.
    Oh yeah? Stealing my entire tax return three years straight because I didn’t have (or need) health insurance was a pretty horrendous policy as well, which thankfully, has ended. 
    With guaranteed issue health insurance available to all, the mandate was necessary to insure that people didn't wait till they got sick to purchase insurance.   That would destort and potentially destroy the market -- and force those who had taken insurance to pay for those who waited till they got sick.

    Sorry, you lost your free ride.
    baconstang
  • Reply 40 of 152
    FolioFolio Posts: 698member
    Looks like @melgross buyback skepticism expressed months ago was not off base. Those billions “squandered” paying > $200/share equal Beats buyout times three. Or you might equate to Netflix media budget. But once stock is up it’ll be forgotten, except for positive effect on P/E and ability to pay higher dividend on fewer shares. I’ve no idea how buybacks are done by Apple. Use of options could offer some protection with this volatility.
    GeorgeBMac
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