Share Buybacks (7)

Ask themselves more questions

Any worthy share buyback has to be canceled for it to be effective.

Companies not doing that, need to ask themselves more questions as to why their share price is not at a level where it should be –

i) are investors not happy with the management’s vision;

ii) is the company not communicating its plans effectively;

iii) has the company not been able to chart a credible track record;

iv) have the financial results for the company been haphazard or inconsistent;

v) is the company too unfocused or too diverse that nobody even wants to follow/research the company;

vi) how is the management track record been in treating minority shareholders;

vii) have transactions or deals been really fair to all shareholders or been forced down investors’ throat –

chances are the stock will be rated properly if the above concerns have been addressed.

Hence most share buybacks will not be entirely successful as it is fighting against the “enemy” when the “enemy” is really internal and not external.