Abnormal Returns on Stock Buybacks

Stock buybacks are all the rage this year.  According to Bloomberg “Corporations have authorized more than $453 billion in repurchases this year, putting 2011 on track for the third- highest annual total behind 2006 and 2007, data through Nov. 11.”

People ask me whether or not this is a positive or a negative given the fact that buybacks last peaked at the saqme time as the stock market did five years ago.  I look at buybacks on a case-by-case basis as an invest0r, anything in the aggregate is too tough.  There is an inherent misunderstanding about the fact that there is a such thing as a “good buyback” and a “bad buyback”.  I explained this concept a bit here:

Berkshire: Not All Buybacks Are Created Equal (TRB)

Anyway, my pal Tadas has a panoramic post up today about the current buyback-palooza that is a must-read, click over below:

Stock buybacks versus dividends (Abnormal Returns)