No. of Recommendations: 1
On average a stock isn't worth any more the day after a buyback than it is the day before. The earnings per share go up, but the cash per share goes down.
Do mine eyes deceive me? That proves the EMH (efficient markets hypothesis)!
If the company buying back stock did not increase or decrease value, then they paid exactly the price that the future earnings were worth, discounted to present, per share. (Overall size of earnings and book value both decreased in a perfectly +1-correlated way.)
Just kidding. Nobody knows the future value, least of all CxOs whose compensation is tied to quickly increasing the stock price now, regardless of the distant terminal value.
