Thursday, June 12, 2008

I Want My Buyback Back....Lehman Edition

As most of the readers know i´m not a fan of stock buybacks ( see label ). To me this is just a desperate way to manage the stock price in the short term. Often enough to unload options or ta mask the dilution of all the option given to employees ( see end of the post ) ... I really urge you to read the entire piece from Floyd Norris. There is much more about the Lehman debacle....

Wie die meisten Leser bereits wissen bin ich überhaupt kein Fan von Aktienrückkäufen. Meiner Meinung nach ist das in erster Linie ein Werkzeg um kurz und maximal mittelfristig den Aktienkurs zu pushen. Fast immer damit vom Management währenddessen Aktienoptionen versilbert werden können oder die Verwässerung durch die mehr als großzügige Vergabe von Aktienoptionen kaschiert werden kann ( siehe letzten Absatz im Posting ) ...... Unter dem Label könnt Ihr einige weiter prominente Beispiele finden wie sinnlos und zum Teil existensgefährendend etliche dieser angeblich dem "Shareholdervalue" dienenden Käufe gewirkt haben...... Ich empfehle zudem dringend den komplette Artikel von Floyd Norris zu lesen. Dort sind etliche zusätzliche Details zum Desaster von Lehman zu lesen.....

Its policy on share buybacks was to avoid the dilution caused by grants of restricted shares and options issued to employees, and that meant it bought back about as any shares as it issued.

It succeeded. The number of shares outstanding at the end of the first uarter was virtually the same as it was at the end of the 2004 fiscal year, after adjusting for a stock split.

In the 13 quarters from the end of that year through this year’s first quarter — that is, before the new $2.8 billion loss — Lehman reported net income of $11.9 billion, and spent $11.8 billion on share repurchases.

It paid an average price of $62.19 for shares that dropped under $23 after the shake-up was announced.

Adding shareholder value at its best.......Needless to say that on almost every conference call i heard "Wall Street Finest" pressed management on more buybacks...... And this in sectors like homebuilders during 2007, retailers, banks, etc......

Ein besonders gelungener Fall dem Aktionär gutes zu tun....... Überflüssig zu erwähnen das während fast aller Anaylstenkonferenzen denen ich in den letzten Jahren beigewohnt habe jedesmal eine Anhebung des Aktienrückkaufes "angemahnt" wurde..... Und das auch noch im Jahr 2007 in Branchen wie den Homebuilders, Banken, Einzelhandel usw......

Compare this with this brilliant quote from Stuart Rose via the great piece from Jeff Matthews How to Buy Back Stock: Not “Just Because We Can” .

Vergleicht das mit diesem Zitat von Stuart Rose aus dem extrem lesenswerten Post von Jeff Matthews hat zu diesem How to Buy Back Stock: Not “Just Because We Can” .

"At that point in time, we still have, Doug, correct me if I'm wrong -- about 200,000 shares outstanding on the old buyback. Again, we -- like we buy our stock like we do everything else, if there's an opportunistic place to buy it. We don't just buy it arbitrarily because we can, we buy it to support what we consider basically ridiculously low levels."

Thanks Stuart/Jeff

This quote comes via Naked Capitalism

Back in the early 1990s, when Sallie Krawchek was an analyst at Sanford Bernstein covering Wall Street, she observed that it was better to be an employee of an investment bank than a shareholder. That if anything has become more true over time.


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