Summary: Stock buybacks are all the rage these days. Fuelled by tax cuts, low cost of capital and not a lot of growth opportunities on the horizon, companies have been buying back their shares by the bucketload. In fact, since 2010 there has been $3.5 trillion in shares bought back in the US alone. Buybacks are great for shareholders in theory - one day you owned 5% of the company, the next day you owned 7% without lifting a finger. How good! However, in reality buybacks haven't always been great for investors or for the companies buying back the shares. In this episode you will learn: What a buyback is and how it is done The theory behind buybacks Notable examples of recent buybacks - Apple, Boeing, Cisco, ANZ just to name a few Why Australia doesn't see as many buybacks as other markets The downside of buybacks, including some notable examples of buybacks gone wrong Stocks and Resources discussed in this episode: Apple (NASDAQ: AAPL) Boeing (NYSE: BA) Cisco Systems Inc (NASDAQ: CSCO) ANZ (ASX:ANZ) General Electric Company (NYSE: GE) The Economist article on Buybacks (2014)
