Sunday, 7th April 2020
Share buy back scandal
· The traditional criticism of share buybacks is that it is a way to enrich the wallets of CEOs and top-level executives because it can drive per-share gains of stock by reducing the outstanding float. However, proponents say repurchases are a low-risk way of allocating capital for firms that are uncertain about the return on investment of higher wages and research and development, and therefore the best use of capital.
· U.S. Airlines Spent 96% of Free Cash Flow on Buybacks and now seek a $50Billion bailout.
· Boeing was the most valuable U.S. industrial company, with a market capitalization of about $249 billion. By March 24 about $175 billion of that had been wiped out.
· S&P 500 share repurchases will halve to $371 billion in 2020, while dividends are forecast to drop 25% from a year ago, David Kostin, chief U.S. equity strategist with Goldman, and his team wrote in an April 3 note.