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Basics of stock buybacks

Jul 12, 2013

Here is today's recommended reading list from Equitymaster...

Does Bernanke think he is God?
Ever since the financial crisis broke out in 2007, central bankers have played a very active, or shall we say hyperactive, role in trying to revive the economy. Trillions of dollars of cheap liquidity has been pumped into the financial system. The cheap money has done little to prop up the economies. But it has rather created several asset bubbles across the globe. Increasing market intervention by central bankers has betrayed the capitalistic ideals that have been the basis on the economic success in the past. How is this changing the investing dynamics? Are economic fundamentals no more important? Or is the world at a very dangerous juncture? Read on to know more... (Minyanville Media)

Should companies save their employees from Wall Street?
One of the most respected companies in the world safeguarded its employees from the Wall Street sharks just when they were set to become easy targets. Should other companies follow this example and insist investing discipline amongst employees? Read on to find out. (StockTwits Inc)

Beware of 4 common mistakes of a bad investor
While investing can be prone to mistakes, it is often advised to keep a checklist of mistakes so that one can avoid them. This interesting article on Fool.com shares some common mistakes, which if ignored, can make one a really bad investor. (The Motley Fool)

Are hedge funds past their days of glory?
Hedge funds were built on the idea that a smarter guy with a better computer can make miracles possible by uncovering inefficiencies in the market. Hedge fund managers were more popular for buying their yachts before the financial crisis struck in 2008. Since then the glory of hedge fund managers has been fading faster than musicians do. Are the hedge funds well past their days of glory? (Bloomberg)

Basics of stock buybacks
Stock buybacks have their own benefits. Not only do they indicate management's faith in the company but buy backs are also EPS accretive. However, they are also used to artificially inflate prices. For instance, an announcement of buyback may result in increasing stock price but in the end buyback may not culminate. There are various other pitfalls attached to it. Read on to find out the true benefits and drawbacks of stock buy backs. It can help investors in gauging the true intention of this signaling mechanism which is used widely by managements. (Pro Right Line Corporation)

Tanushree Banerjee

Tanushree Banerjee (Research Analyst), is the editor of Stock Select and, ValuePro Equitymaster's oldest recommendation services. She is also the editor of Equitymaster's most popular newsletter read by over 300,000 subscribers, The 5 Minute WrapUp. Tanushree started her career at Equitymaster covering the banking and financial sector stocks and scrutinising RBI policies. Over the last decade, she developed Equitymaster's research processes that helped us pick out various multibaggers, across all sectors. A firm believer of "safety first" when it comes to investing, Tanushree closely follows the investing philosophies of Warren Buffett, Jeremy Grantham, and Joel Greenblatt.

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