When a company engages in repurchasing plans, it is giving up potential growth. Management could have used the money for more practical applications, such as research and development or new products.
“Goldman is expecting companies to increase the amount spent investing for growth by 6% to $1.3 trillion, but will increase cash returned to shareholders by 19% to $1.2 trillion. Spending by companies outside of the energy space is expected to grow by 7%, while spending by energy companies should recover somewhat assuming oil prices continue to stabilize,” according to MarketWatch.
For more information on buyback stocks, visit our buybacks category.
PowerShares Buyback Achievers Portfolio