COMPANIES BUYING BACK STOCK

You frequently hear that a company buying back stock is returning value to the stock holders  I have long held that this is a fraud and that a company buying back stock is a waste of corporate money and has nothing to do with the stock value.  If they don't have any constructive use for the money, return it to stock holders as a special dividend.

Wise investors look for increasing profits and not earnings per share (EPS).

I am certainly not alone in such feelings:  Richard X. Bove published a piece about banking on CNBC (September 18, 2017).  In this article he makes the following comments:

Next, the bank bulls are committed to the belief that buying back stock drives up bank stock prices. I actually asked a half dozen banks whether they had completed any studies to prove this assertion. Not one had, or more correctly, not one was willing to share this information with me. Yet, they were following the demands of the bank bulls, in my view, blindly.

Stock buybacks are done for financial engineering purposes. The reality for banks is that capital is the core source of bank earnings. It is the basis of leveraging the bank balance sheet and making loans. If a bank reduces capital it lowers its ability to earn money; weakens its secular growth prospects. Why would anyone want to buy a company which is lowering its growth potential to play "stock market?"*

* https://www.cnbc.com/2017/09/18/why-the-bulls-are-so-wrong-about-bank-stocks-bove-commentary.html