I have mixed opinions on whether EM’s debt and cash strategy is good and whether it makes sense. Anyone willing to discuss?
11 replies (most recent on top)
Buybacks and dividends are all about shareholders - board members (or what they represent) and execs. Does anyone honestly believe EM cares more about average employees? Nope! All the buybacks has not increased EM's market cap. However, some people have surely cashed in over and over again.
If EM had invested or saved that $300 billion rather than stock buybacks, it would be a far more valuable company today. No debt ever. No slowdown of projects during downturns. Possibly buy a competitor and have more assets. Not divested of 45% of Guyana and get double the good profit there.
What do you think was possible if EM did zero buybacks in its history?
So after approximately $300B of cumulative stock buybacks the Company is worth less than 300B, what us the total return on investment >0 or <0?
EM would be better off buying Tbills
Every dying beast will eat its own young to survive.
It's not the best carbon chain, but we're bound to it.
Gotta pity the next species that's using our remains for their future.
@1mws+1gHje5vY When buybacks are announced, stocks rise because you’re taking the same earnings and assets and dividing it by a smaller number of shares. It’s been proven over and over that this is the case and is pretty simple math. However, many times that buybacks are announced there’s significantly larger news announced with it, like earnings releases, which also play a huge impact on price. When they actually perform the buyback isn’t over one day, it’s a slow process over a period of time and usually handled by a 3rd party, so nobody even knows when exactly the buyback happens, but it’s also already priced in by that point. A few seconds after it’s announced it’s priced in.
I have never seen EM stock price increase after a buyback. I have actually seen the stock price drop after many buybacks.
Fewer shares in circulation at a lower price per share seems to just make EM’s value lower.
Buybacks do return value to shareholders, that’s kinda the whole point. It reduces the amount you pay in dividends going forwards as well as increases share price. Also you have to buy back at least some stock to offset RSU grants at a minimum. Since you can’t continually dilute shares, there’s a max number of allowable shares specified in the company charter. It can be adjusted by the board and shareholder vote but it’s seen as a bad sign in the market if you have to do that (aside from if it’s due to a split, which then it’s understandable and good).
And they are saving plenty of cash as well, it’s not all being spent on buybacks. Exxon could buy during the next dip and be perfectly fine. Doesn’t make any sense though as most assets for sale aren’t the quality that XOM is looking for. Most for sale are similar to the ones XOM has for sale, which are best run by smaller operators with very different business models. Same as other big companies.
EM should stop throwing all cash away on stock buybacks. Stock buybacks have not returned ANY value to shareholders.
Save cash for next downturn and thrive when others go into debt. Maybe even buy out some companies next downturn if have enough saved cash
They are trying to ensure they own enough stock in order to maintain the directors they want are in place.
Why do I care? - above my pay grade. LOL
EM should stop throwing all cash away on stock buybacks. Stock buybacks have not returned ANY value to shareholders.
Save cash for next downturn and thrive when others go into debt. Maybe even buy out some companies next downturn if have enough saved cash.
What are your opinions