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Buybacks And Lies; entered at 2019-02-27 11:29:07

Kgmqt
Posts: 282
Registered: 2013-08-19 Minnesota

Quote:

Now the company runs and makes a profit. So what the board does is vote to buyback 100 of the shares in the public market. What just happened?

The public's interest of 75% of the company just got cut; the insiders held 25% but now they hold 28%!

It doesn't end there. The 100 shares gets bonused out as "restricted stock units" to the officers and directors! So the total number of shares doesn't decrease; now there are 350 shares in the hands of insiders and only 650 in the hands of the public.

So, if run to the extreme could this also be insider trading? You have the CEO creating a mechanism to move shares or % of shares from one side to the other. The timing on this is known. What prevents them from making certain business decisions that drive the stock down/up to align with these buybacks?

2019-02-27 11:29:07