An article over the weekend by Barron’s highlighted the phenomenon of companies spending money on stock buybacks.
This has been a hot topic on Wall Street, as the move makes the stocks more attractive from a fundamental basis because the buybacks lower the amount of shares outstanding and boost the earnings per share. The naysayers believe it is financial manipulation that hides the fact that earnings growth is slowing.
One way to determine how Wall Street really feels about the strategy is to look at indices that track stocks implementing stock buybacks.
The PowerShare Buyback Achievers Fund (ETF) (NYSE: PKW) is the largest ETF that focuses on companies concentrating on buybacks. It currently has $2.8 billion in assets under management. The ETF is a basket ...
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