Insider Selling Reveals Fallacy Of Buyback Theory

By Lance Roberts – Real Investments Advice

To benefit from a corporate buyback, an individual must sell their shares to the company. Conversely, those holding on to their shares are not compensated. The only benefit shareholders may receive is a proportional increase in their ownership percentage, which is meaningless if the company’s intrinsic value isn’t increasing.

Notably, the latest data on insider selling and corporate buybacks makes this disconnect very clear. In July, S&P 500 companies announced $166 billion in buybacks, the largest July on record.