Subject: OT: sell into buybacks: not necessarily illegal
I've been trying to understand animosity to buybacks. It's definitely not that buybacks are often done at high prices that harm shareholders as we've discussed. The animosity comes from a number lines of reasoning, some of which arises from "misunderstands corporate finance" and some animosity comes because there's a few types of bad behavior associated with buybacks.[1] One is taking bailout money and doing buy backs. Here's a lesser known one that strikes me as actual corruption. This quote is from a speech by former SEC Commissioner Robert Jackson:

"And, in the process, executives take a lot of cash off the table. On average, in the days before a buyback announcement, executives trade in relatively small amounts'less than $100,000 worth. But during the eight days following a buyback announcement, executives on average sell more than $500,000 worth of stock each day'a fivefold increase. Thus, executives personally capture the benefit of the short-term stock-price pop created by the buyback announcement."

I guess that is what they call establishing "plausible deniability."

I labeled this OT but is it? Buffett carefully does stock buybacks as a form of delivering the benefit of excess profits to shareholders, but we are now paying a 1% tax because of the stench around stock buybacks. Try explaining that Buffett is different than all those other people doing buybacks, so a penalty tax is not appropriate. Good luck!


[1] I took the above quotes from today's opinion piece by Matt Levine https://www.bloomberg.com/opin...