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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Freedom Fighter who wrote (67774)	9/16/1999 10:06:00 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 132070

Wayne - (...Agreed. Companies need never repurchase the exercised options. But the dilutive effect costs me just as much in terms of EPS progress, percentage ownership, and ultimate investment value...) From a very limited sample, I don't think this is true. As a test, investigate what the dilution would actually be if no shares were re-purchased. I suspect that you would find that a typical company that you might want to invest in, at a reasonable price, might have 25% sales growth, less than 5% dilution per year without buybacks, and between 25% and 100% of earnings used to buyback back stock just to maintain share count at neutral. If I am buying because I want a claim on earnings, then I believe the numbers will show that the dilution will be preferable. I suspect that Wall Street tends to place far too much value on buyback announcements, even if share count is not reduced. Regards, Don

To: Freedom Fighter who wrote (67774)	9/16/1999 10:49:00 AM
From: Mike M2	Respond to of 132070

Wayne, one additional benefit to company share repurchases is that they can be executed at strategic times when the stock is under pressure or when bad news is announced. I can just imagine the bubbleheads at CNBS saying XZY corp. is only down 1 1/2 points on bad news. gee the news was already priced in the stock. This added stability encourages "investors" to accumulate these seemingly invincible stocks. I would suspect many companies use share repurchases to smooth out the downside volatility. Of course defenders of this practice would say it makes sense buy at a discount - i agree . What concerns me is people are lulled into a sense of complacency by this and it inflates PEs leading to a bigger bust when the situation can no longer be managed ( I wouldn't call it manipulated because that is illegal-ho ho ho). The SEC would not stand for that nor would the most ethical administration in history tolerate it. ho ho ho . Cattle futures anyone? Short healthcare stocks? I wish that I had friends at the FED who would tell me about a surprise rate cut before options expiration so that I could buy call cheap but that is illegal and unethical especially with such vigorous enforcement in our securities markets -g-. The parallels to the 20s are ominous.