It has been a poster child for the buy side community and we frankly don't like them? Why?
As all investors, we don't like to see shareholders diluted by rounds and rounds of new issues. This has been a MAIN reason why we shorted financials and still don't own them. The banks need more money, lots more. They can't issue cheap debt, so they must "blow out" current shareholders with massive stock issuance.
But we don't care much for buy backs? Why ?
Because it takes a scarce resource, cash, and mis allocates it. Companies grow by capital investment, new products, and new technologies. In the long-run they do not grow by buying back shares.
This money that could be used for dividends or cap ex was WASTED BY ACQUIRING HIGHLY OVERVALUED SHARES IN THE MARKET. So rather than invest and grow, companies find themselves short of cash, having spent it on grossly overvalued shares. Not a winning long-term strategy.
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