Its not the split that is significant, its the buyback. Splits, as has been discussed many times on this and other threads don't increase either the value of the company or of one's piece of it. As Buffet says, you have two hatcheck tickets instead of one. Nice psychologically, and perhaps increases the investing pool, but does not directly appreciate your money.
Buybacks are different. If the company buys back the stock and retires it, then each remaining share represents a proportionally bigger piece of the company, and is therefore more valuable
However, if the buyback is simply to buy stock which will then be distributed to management under various performance incentives, then that's a different story. If that's what they are doing with this money (what did the press release say, 60 to 70% of cash flow?!?!) then that is an appallingly large number and has an egregious impact on the value of our shares. I like performance incentives, but not at this scale.
Does anyone know what the company is doing with the shares?
Chuz -- any ideas? I know this is a concern of yours.
Cheers.
PS: I love this company, so no flames please. |
