Well done. This encapsulates 3 types of companies well, in a simple manner, explained so the reader can really understand: buybackers, dividend payers, and growers.
Notably, sometimes growers are buybackers (eg, META, BABA), and sometimes divvy payers are also growers (but those are rare).
Overall I really liked the piece. One issue I had was with the idea that with share buybacks you own a larger piece of the pie and the pie stays the same. I believe this is a common misconception on wall street. While yes you do own more of a company if there are less shares outstanding, there is also less company to own. The company does not simply snap its fingers and buyback shares, it needs to spend cash to buy shares (cash that was previously owned by the shareholders). The reason shares increase after buybacks include: Wall Street realize that insiders believe the shares are undervalued and the insiders must know something the investors don’t (because they’re on the inside), and two the investors see less cash available to be burned on useless endeavors.
Well done. This encapsulates 3 types of companies well, in a simple manner, explained so the reader can really understand: buybackers, dividend payers, and growers.
Notably, sometimes growers are buybackers (eg, META, BABA), and sometimes divvy payers are also growers (but those are rare).
Overall I really liked the piece. One issue I had was with the idea that with share buybacks you own a larger piece of the pie and the pie stays the same. I believe this is a common misconception on wall street. While yes you do own more of a company if there are less shares outstanding, there is also less company to own. The company does not simply snap its fingers and buyback shares, it needs to spend cash to buy shares (cash that was previously owned by the shareholders). The reason shares increase after buybacks include: Wall Street realize that insiders believe the shares are undervalued and the insiders must know something the investors don’t (because they’re on the inside), and two the investors see less cash available to be burned on useless endeavors.
It would be useful to extend this to include pros and cons from an after tax perspective for shareholders.
Can't zoom on the Apple graph. Still too small to read on a iphone