> Now you can work your ass off to grow the company, or if manage to convince the right people so you can get those buybacks through, you could go for burning through that cash pile on buybacks, and profit nicely from the resulting rise in share price.
That won't work actually. In an efficient market the share price is unchanged by a share buyback. What will change is earnings per share, as you have the same earnings divided by less shares.
> But it's bad for you if you invest without understanding what is going on. Then again, that's always the case.
If you can get a deal where raising EPS gets you a nice bonus, then sure you can game the system. Those shareholders don't know what they're doing. The shareholders are still the ones that are getting the money from the share buybacks they're just also deciding to give a bonus to management based on flawed metrics.
That won't work actually. In an efficient market the share price is unchanged by a share buyback. What will change is earnings per share, as you have the same earnings divided by less shares.
> But it's bad for you if you invest without understanding what is going on. Then again, that's always the case.
If you can get a deal where raising EPS gets you a nice bonus, then sure you can game the system. Those shareholders don't know what they're doing. The shareholders are still the ones that are getting the money from the share buybacks they're just also deciding to give a bonus to management based on flawed metrics.