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by buttcoinslol 2456 days ago
> When companies have now started to go into debt to buyback shares and artificially raise their EPS, who are they targeting?

Their shareholders, which includes management. Buybacks are essentially dividends in another form. Buybacks have the upside of not being expected to go up indefinitely, and there are no dividend cuts to upset investors.
1 comments
topmonk 2456 days ago
Why does everyone ignore the second part of my point? Corporations are going into record debt to do this. It is one thing to pay back shareholders by a dividend or buyback or whatever, if the company has extra profits, but it is quite another to borrow money to do it.

That works for now, but as soon as those interest rates tick up...

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buttcoinslol 2456 days ago
Money is extremely cheap to borrow, and companies have decided the interest rate risk is lower than the short-term share price gains from borrowing money to do buybacks. Perhaps current management assumes they won't be the ones left holding the bag.

I agree with you, when rates go up a large amount of zombie companies being held up by cheap money are going to go bankrupt, and it will have large ripple effects.

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