General Discussion

IronLionZion

(45,540 posts) Mon Jun 11, 2018, 01:34 PM Jun 2018

Executives are cashing in on the explosion in stock buybacks

http://money.cnn.com/2018/06/11/investing/stock-buybacks-sec-report/index.html

Corporate America, flush with cash from President Trump's tax cuts, is buying back stock at a record pace.
Wall Street loves that. It signals that CEOs believe their shares are cheap, and stocks typically spike after buybacks are announced.

Yet an SEC official has uncovered what he calls a disturbing trend: In the days after executives unveil buybacks, they quietly cash out their own shares.

An analysis released Monday by SEC Commissioner Robert Jackson Jr. found that the percentage of insiders selling stock more than doubled immediately after buyback announcements.

And the amount of stock being unloaded is not trivial. Daily stock sales spiked from an average of $100,000 to more than $500,000 per executive, researchers found.

"Right after the company tells the market that the stock is cheap," Jackson said in a speech on Monday, "executives overwhelmingly decide it's time to sell."

The report studied 385 buybacks in 2017 and during the first three months of 2018. Thanks to the reliable stock bounce, insiders gained a total of $75.1 million on their stock sales, the SEC researchers calculated.

This house of cards has winners and losers. Some people are getting rich while the rest will lose their life savings when it all comes tumbling down. Who is excited to lose their retirement savings next year in the Trump recession?

11 replies

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Executives are cashing in on the explosion in stock buybacks (Original Post) IronLionZion Jun 2018 OP

When things get worst as inflation and twitlers tariffs make it harder for people kimbutgar Jun 2018 #1

They already cashed out IronLionZion Jun 2018 #3

The ceos are buying back stocks that will go down affecting their market capitalization kimbutgar Jun 2018 #4

"In the days after executives unveil buybacks, they quietly cash out their own shares. " IronLionZion Jun 2018 #6

There is nothing wrong with that. former9thward Jun 2018 #10

Unless it's insider trading IronLionZion Jun 2018 #11

The markets are not crashing. former9thward Jun 2018 #7

Executives are getting out IronLionZion Jun 2018 #8

I know the market is not crashing kimbutgar Jun 2018 #9

They want the money the company has and will just issue themselves more stock and options later TeamPooka Jun 2018 #2

Just like what Trumper told his rich buddies after the tax law passed redstatebluegirl Jun 2018 #5

kimbutgar

(21,210 posts)

1. When things get worst as inflation and twitlers tariffs make it harder for people

Reply to IronLionZion (Original post)

Mon Jun 11, 2018, 01:39 PM

Jun 2018

To buy those corporate goods and services and quarterly numbers fall and stocks lose value it will be a sweet payback.

IronLionZion

(45,540 posts)

3. They already cashed out

Reply to kimbutgar (Reply #1)

Mon Jun 11, 2018, 01:42 PM

Jun 2018

they've already gotten their profits and continue to do so. It's normal people who get screwed when the market crashes. Like retirees.

kimbutgar

(21,210 posts)

4. The ceos are buying back stocks that will go down affecting their market capitalization

Reply to IronLionZion (Reply #3)

Mon Jun 11, 2018, 01:48 PM

Jun 2018

Affecting their valuation on their balance sheets.

IronLionZion

(45,540 posts)

6. "In the days after executives unveil buybacks, they quietly cash out their own shares. "

Reply to kimbutgar (Reply #4)

Mon Jun 11, 2018, 01:58 PM

Jun 2018

The article is about the executives selling shares at the higher price and taking profits.

former9thward

(32,082 posts)

10. There is nothing wrong with that.

Reply to IronLionZion (Reply #6)

Mon Jun 11, 2018, 03:46 PM

Jun 2018

Buybacks are announced well in advance. Anyone can buy stock if they think it will go up on a buyback announcement. The selling is public information. The amount of money made by executives was $195,000 for each company doing a buyback. Sorry, but that is petty in the world of stocks.

IronLionZion

(45,540 posts)

11. Unless it's insider trading

Reply to former9thward (Reply #10)

Mon Jun 11, 2018, 03:52 PM

Jun 2018

which is what the SEC is watching for

former9thward

(32,082 posts)

7. The markets are not crashing.

Reply to IronLionZion (Reply #3)

Mon Jun 11, 2018, 02:02 PM

Jun 2018

But if you, or anyone else thinks they will, then get out. No one forces anyone to be in the market.

IronLionZion

(45,540 posts)

8. Executives are getting out

Reply to former9thward (Reply #7)

Mon Jun 11, 2018, 02:12 PM

Jun 2018

The article is about them selling their shares

kimbutgar

(21,210 posts)

9. I know the market is not crashing

Reply to former9thward (Reply #7)

Mon Jun 11, 2018, 02:28 PM

Jun 2018

But the market is artificially high because of computerized trading. I used to work in the industry before the rise of computer programs. Then we saw our stocks become artificially inflated and the balloon could burst if one major stock goes down. I was there in 1987 and saw how quickly stocks could drop. It feels like we’re nearing these 1987 levels of inflated, overpriced and under capitalized stocks driven by computer programs.

Personally I only have a little money in an annuity that invests in stocks but otherwise cash is still king. And pretty soon a lot of IRA funds will be expiring and it will be interesting to see what happens.

TeamPooka

(24,259 posts)

2. They want the money the company has and will just issue themselves more stock and options later

Reply to IronLionZion (Original post)

Mon Jun 11, 2018, 01:40 PM

Jun 2018

as a bonus for doing the stock buyback to help the stock price.
Vicious cycle of corporate fraud.

redstatebluegirl

(12,265 posts)

5. Just like what Trumper told his rich buddies after the tax law passed

Reply to IronLionZion (Original post)

Mon Jun 11, 2018, 01:51 PM

Jun 2018

he made them a ton of money with that deal.

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