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Technology Stocks : Novellus
NVLS 2.400+2.1%Jul 24 5:00 PM EST
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To: BWAC who wrote (3678)2/15/2008 10:42:01 AM
From: brushwud   of 3813
 
Blanket statement. But what if, as in the case of NVLS, outstanding shares ae being decreased thru the buyback?

You'd be hard pressed to find a company doing share repurchases whose stock price outpaces the rest of the market. Here's a chart from Novellus's 10-K showing how they're doing vs. the S&P 500:

sec.gov

In any other context than a share repurchase, everyone knows that it's best to diversify. It's some sort of religious belief that would make someone bet $700M on one stock.

Shares are always being reduced by stock repurchases, isn't that the point? It's the opposite of an IPO: selling shares means the company is growing faster than it can finance through reinvested profits; repurchasing shares means the company has reached a mature stage and is no longer a growth stock. Then they should increase cash dividends and let investors diversify into other investments.
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