Research paper from O’Shaughnessy Asset Management.
Summary: “This paper outlines a very brief history of buybacks, explores the reasons (good and bad) why companies buy back stock, and explains the huge advantage available to investors.”
In “The Power of Share Repurchases,” O’Shaughnessy Asset Management (OSAM) explores the significance of share buybacks in corporate finance, highlighting their advantages over dividends.
Since the late 1990s, the total cash used for buybacks has surpassed that of dividends, with a brief exception during the financial crisis.As of April 2014, U.S. companies held cash equivalent to 24% of their combined market capitalizations, indicating the potential for continued buyback activity.
OSAM emphasizes that while buybacks can enhance shareholder value, they should be evaluated within the context of a company’s overall capital allocation strategy to ensure they contribute to sustainable growth and value creation.
asfasdfasdf