David Einhorn: Good Buybacks vs Bad Buybacks

Johnny HopkinsDavid EinhornLeave a Comment

During his recent interview with CNBC, David Einhorn discussed the difference between good buybacks vs bad buybacks. Here’s an excerpt from the interview:

Einhorn: There’s two types of buybacks, right? There’s the buybacks where the company has extra profits and they want to return it to shareholders, and they want to do… and the valuation of the stock they feel is undervalued, and they think they can create value for existing and continuing shareholders by repurchasing some of the shares.

Thereby shrinking the number of shares outstanding and giving everybody an opportunity to own more of the company without having to put more money into the company.

I think those buybacks are great.

There’s another kind of buyback, which is you have stocks which trade at really, really high prices, and they pay their people in stock and they try not to count the earnings, but to try to reduce the dilution. They take their cash flow and buy the overvalued stock. I think that that kind of buyback is less desirable.

You can watch the entire discussion here:

For all the latest news and podcasts, join our free newsletter here.

FREE Stock Screener

Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple:


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.