[diogofranco]

Buybacks "pumping the stock price" is a common misconception, but not actually true (unless the buyback is executed at prices lower than fair value).

There are less shares outstanding afterwards, but there is also less cash, so if executed at fair prices there is no reason for the stock price to move.

Just think through an example of a simple company which is a pot of $1000, and can get 10% returns on it. There are 100 shares, so if investors want 10% returns, shares should trade at 10$ (P/B = 1). If the company repurchases half the shares, there will be only 50 shares but the company only has 500$ now, making each share still worth 10$ for 10% hurdle rates.

[positr0n]

But companies are not pots of assets. What you are buying is assets - liabilities + predicted future cashflow * discount rate.

So a more realistic example would be a company with 100 shares, $1000 of cash, and $1000/yr stable income.

So before a buyback, 1 share grants you the benefits if whatever the company does with $10/yr of income. Whether it be dividends, reinvestment, etc.

If the share price is $25 and they spend half their cash on hand to buy 20 shares back, now one share gets you $12.50/year of income. Thus the share is worth more than it was before.

Disclaimer: Armchair finance / economics knowledge. Hope the above is correct.