How to find
companies that are buying back shares
Companies
that think their shares are undervalued sometimes buy back shares
to reduce supply and boost the stock price. But how can we find
these companies?
Difficulty
Level: easy Time Required:
ongoing
Here's
How:
- Companies
routinely announce stock repurchases in a press release.
Keep an eye on the business section of your newspaper.
- Go
to your favorite news search engine and search for the
keywords "buyback" or "repurchase".
This will bring up press releases from companies
announcing buybacks.
- In
Canada, stock repurchase plans are called "Normal
Course Issuer Bids".
- Search
Canada Newswire or other wire service for "Normal
Course Issuer Bid".
- Be
aware that stock buybacks are not a panacea. A company
should not buy back shares unless that's the best
utilization of its capital, which isn't always the case.
- Read
colleague Mike Griffis's article on Stock Buyback
Programs for a discussion of this issue. (See links
below.)
Tips:
- Stocks
often jump in value immediately on announcement of a
stock repurchase plan so it may be worth waiting for the
price to settle a bit before purchasing.
- Make
sure the company follows through on its intentions. An
announcement without an actual purchase follow-up will
bite you.
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