Found support at 50% fib levels
closed above monthly support line (pink)
chikou above cloud
closed above tenkan and tested kijun
long to fib levels above 401 odd levels
short below 380 to fib levels
BUY BACK OF SHARES :
Boost in Share Prices
When the economy is faltering, share prices can plummet as a result of weaker than expected among other factors. In this event, a company will pursue a buyback program since it believes that company shares are undervalued.
Companies will choose to repurchase shares and then resell them in the open market once the price increase to accurately reflect the value of the company. When per share increases, the market will perceive this positively and share prices will increase after buybacks are announced. This often comes down to simple . When there is a less available supply of shares, then an upward demand will boost share prices.
When excess cash is used to repurchase company stock, instead of increasing dividend payments, shareholders have the opportunity to defer capital gains if share prices increase. Traditionally, buybacks are taxed at a capital gains tax rate, whereas dividends are subject to ordinary income tax. If the stock has been held for more than one year, the gains would be subject to a lower capital gains rate.
When companies pursue buyback programs, this demonstrates to investors that the company has additional cash on hand. If a company has excess cash, then at worst the investors do not need to worry about cash flow problems. More importantly, it signals to investors that the company feels cash is better used to reimburse shareholders than reinvest alternative assets. In essence, this supports the price of the stock and provides long-term security for investors.
While investors tend to adore buybacks, there are several disadvantages investors should be aware of. Buybacks can be a signal of the marketing topping out; many companies will repurchase stocks to artificially boost share prices. Typically, executive compensations are tied to metrics, and if cannot be increased, buybacks can superficially boost . Also, when buybacks are announced, any share price increase will typically benefit short-term investors rather than investors seeking long-term value. This creates a false signal to the market that are improving due to organic growth and ultimately ends up hurting value.
The Bottom Line
Generally speaking, redistributing wealth has been viewed positively by investors. This can come in the form of dividends, retained , and the popular buyback strategy. In terms of finance, buybacks can boost shareholder value and share prices while also creating a tax-advantageous opportunity for investors. While buybacks are important to financial stability, a company’s fundamentals and historical track record are more important to long-term value creation.