Ah stock buybacks, the most politically charged of all corporate manoeuvres. Ask Elizabeth Warren about them and she’ll tell you they’re pure “market manipulation” and should be made illegal. When public companies repurchase their own stock hoping to boost earnings-per-share, what they’re really doing is cannibalizing innovation, the Massachusetts Senator argues. Money that could have been spent investing in new factories, research and development, or hiring new employees, is instead used simply to lift stock prices, enriching wealthy shareholders and insiders at the expense of economic growth.
But Berkshire Hathaway chairman and CEO Warren Buffet is a firm believer in stock buybacks, having used them extensively for decades. And the 92 year-old billionaire didn’t pull his punches when discussing critics of the practice in his annual shareholder letter released in February.
