Buffett has very clear ideas on share repurchases and subsequent cancellations.
Buybacks clearly make sense when
The problem is that executives would rather increase company size via misplaced acquisitions,, leading to diworsification, diversifying to deteriorate, as Peter Lynch has wittily anointed it.
Buffett believes that it only makes sense to use own shares to buy companies when you get more in return, which doesn't usually happen.
Buybacks clearly make sense when
- there are no better alternative investment options and
- the share is trading below the intrinsic or target business value.
The problem is that executives would rather increase company size via misplaced acquisitions,, leading to diworsification, diversifying to deteriorate, as Peter Lynch has wittily anointed it.
Buffett believes that it only makes sense to use own shares to buy companies when you get more in return, which doesn't usually happen.
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