Buybacks should be considered by managements when they feel that their own stock price is hugely undervalued. It is never a tool to support stock prices. And companies often go in for regular buybacks if their stock prices remain depressed for long periods of time.
Of late a lot of companies, IT companies in particular go in for regular buybacks to reward shareholders. It is sometimes more tax efficient for retail investors than paying out dividends . (need to check the latter fact with CA guys. )
Buybacks are of two common types. The tender offer wherein investors tender their shares for buyback and buyback is done in proportion to shareholding. The other is market buyback which is more of an attempt to protect slide in stock prices. Management decides a certain sum of money earmarked for buyback and a maximum price below which they will buy the shares.
As investors we need to understand that the most important holy grail of stock prices appreciating is growth in sales and profits, and predictable growth is preferred to lumpy growth. All other things are to be considered as much less important factors. So it makes sense not to waste too much time thinking about these less important things.
@sgkfinance I dont track Hilton metals.
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