Subject: Re: OT Damodaran on Buybacks and Dividends
"A company that buys back stock at too high a price, relative to its intrinsic value, is redistributing value from the shareholders who remain in the company to those who sell their shares back."

Unnecessarily harming the remaining owners sounds destructive to me.

Given that everybody rational buys shares with the idea that they might someday be sold for a higher amount than they were bought for, why do you think selling shareholders are less deserving than non-selling shareholders?

A company doing a buyback is buying back shares in the market, and telling eveybody that that is what they are doing. Here's the trading desk, here's the posted prices bid and ask. What better way to decide who to give the capital back to than to ask for volunteers and have them bid for the right to get the payments?

R: