buyback

Definitions (2)
Popular Terms
1. Exporting: Counter-trade arrangement in which an exporter (of tire making machinery, for example) agrees to buy a specified portion of the manufactured goods (tires, in this example) as an incentive to the buyer.
2. Securities: Offer by a firm to repurchase its own shares from the shareholders to (1) to raise the stock's price, (2) remedy over-capitalization, or (3) defend itself against a hostile takeover attempt.

Notable Quotable

When Should Companies Buy Back Shares
"There is only one combination of facts that makes it advisable for a company to repurchase its shares: First, the company has available funds -- cash plus sensible borrowing capacity -- beyond the near-term needs of the business and, second, finds its stock selling in the market below its intrinsic value, conservatively-calculated. To this we add a caveat: Shareholders should have been supplied all the information they need for estimating that value. Otherwise, insiders could take advantage of their uninformed partners and buy out their interests at a fraction of true worth. We have, on rare occasions, seen that happen. Usually, of course, chicanery is employed to drive stock prices up, not down.
The business "needs" that I speak of are of two kinds: First, expenditures that a company must make to maintain its competitive position, and second, optional outlays, aimed at business growth, that management expects will produce more than a dollar of value for each dollar spent."
- Warren Buffett


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