Companies Are Stampeding to Buy Back Their Own Stock: Just Like Before the 2008 Crash

by Pam Martens and Russ Martens, Wall Street on Parade On December 20, 2007, Bear Stearns held a conference call with analysts to review its fourth quarter earnings. During the call, the company revealed that “For the full fiscal year, the company repurchased 12 million shares of common stock at an aggregate cost of $1.7 billion.” Less than three months later, the company collapsed. On June 13, 2008, Michael Rapoport of Dow Jones Newswires wrote that Lehman Brothers had reported “in its most recent quarterly report in April that it had repurchased about $765 million worth of its stock during its fiscal first quarter, at an average price of $59.05 a share. That includes some shares tendered by employees as payment when exercising stock options.” Three months after Rapoport wrote those words, Lehman collapsed into bankruptcy, its shares effectively worthless. Then there was Merrill Lynch, the century old iconic retail brokerage firm and investment bank. In a July 17, 2007 press release, Merrill Lynch reported the following: “As part of its active management of equity capital, Merrill Lynch repurchased 19.8 million shares of its common stock for $1.8 billion during the second quarter of 2007, completing the $5 billion repurchase program authorized in October 2006 and utilizing $557 million of the $6 billion repurchase program authorized in April 2007.” Continue Reading>>>

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