tag:blogger.com,1999:blog-8152901575140311047.post981090392514944038..comments2024-03-27T09:01:53.517-04:00Comments on Musings on Markets: January 2016 Data Update 7: Dividends, Potential Dividends and Cash BalancesAswath Damodaranhttp://www.blogger.com/profile/12021594649672906878noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-8152901575140311047.post-72477211604793148932016-03-02T20:11:34.205-05:002016-03-02T20:11:34.205-05:00What do US companies do after the buyback? Do they...What do US companies do after the buyback? Do they cancel the shares or are they resold? If resold we definitely must use “Net buybacks” as the payout measure... <br />Are most of buybacks executed in stock markets (open market repurchases)? Are there any statistics available on this? If they are executed at market prices can we still say that they are an alternative to paying dividends? As an investor I can always sell my shares in the open market... Gabihttps://www.blogger.com/profile/09701702700808734477noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-22802435519878775182016-02-23T12:06:42.420-05:002016-02-23T12:06:42.420-05:00Hi, Prof. Damodaran! It's a little puzzling in...Hi, Prof. Damodaran! It's a little puzzling in your "Cash as % of market capitalization" figure that there are so many zero-cash or near-zero-cash firms. What's your measure of cash here? Since your sample includes global firms, is the result mainly driven by US firms or International firms? Thank you very much!Anonymoushttps://www.blogger.com/profile/17725930366596837521noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-62457766404709846022016-01-30T13:04:23.721-05:002016-01-30T13:04:23.721-05:00Yes. You are double counting, if you do this. If y...Yes. You are double counting, if you do this. If you use total cash yield, then you have to be looking at the change in market capitalization (not the change in price per share) as your price appreciation component.Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-29969498771531642812016-01-30T12:57:28.318-05:002016-01-30T12:57:28.318-05:00Thanks Prof for the explanation, but the question ...Thanks Prof for the explanation, but the question which has been haunting me is that when I calculate Total return which is Price appre+Dividend yield+Buyback yield,am I actually double counting the buyback effect since it is already captured in the price?.<br /><br />Thanks again,Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-208595706676815452016-01-30T08:40:51.422-05:002016-01-30T08:40:51.422-05:00A buyback is generally a value neutral transaction...A buyback is generally a value neutral transaction, leaving you with a price appreciation that just offsets the dividend. That said, you can have value increasing buybacks (when they are funded with debt at an under levered company) and value destructive ones (where you buy back stock with borrowing you cannot afford or by rejecting good investments).Aswath Damodaranhttps://www.blogger.com/profile/12021594649672906878noreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-69941108302223098262016-01-30T04:57:12.368-05:002016-01-30T04:57:12.368-05:00Hi Prof,
Great post,may I ask you if a company po...Hi Prof,<br /><br />Great post,may I ask you if a company post its buyback will trade at its old price multiple as you were saying an investor who stays invested post buyback will be benefited by the price appreciation.So would the magnitude of gain be the same for a shareholder who opt to sell and not?<br /><br />ThanksAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-8152901575140311047.post-104041824490388822016-01-30T00:54:55.490-05:002016-01-30T00:54:55.490-05:00Do you think that an high earnings' yield comb...Do you think that an high earnings' yield combined with a dividend payout between 30% and 50% could be the best combo for an investor? That is a cheap company with a disciplined policy of capital allocation.Anonymousnoreply@blogger.com