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Apple’s scooping up $14-billion (U.S.) of its own stock in the past two weeks gives shareholders the economic equivalent of a dividend without having to pay tax. The tech giant has a huge war chest, but for other companies buybacks are often a form of financial engineering that doesn’t make sense for investors.
Apple’s scooping up $14-billion (U.S.) of its own stock in the past two weeks gives shareholders the economic equivalent of a dividend without having to pay tax. The tech giant has a huge war chest, but for other companies buybacks are often a form of financial engineering that doesn’t make sense for investors.
(MIKE SEGAR/REUTERS)

Buyback spree shows corporate America is running out of ideas

Corporate America is rediscovering the art of idiotic investing. U.S. companies bought back more of their own stock last year, despite toppy-looking share prices. It’s a familiar waste of cash driven by bosses who are running out of ideas and dumb incentives that favour financial engineering. This time round, activist shareholders are adding to the pressure.