Enough With The Buybacks, Please!

I’m really getting tired of reading the earnings releases for the third quarter and seeing that Arch Coal (NYSE:ACI) have bought back shares and paid double what the stock is trading for now.  Here’s the Arch Coal buyback :

Arch also repurchased 1.5 million shares of its outstanding common stock at an average price of $35.62 per share in the third quarter of 2008. These repurchases were funded by operating cash flows. Since the company’s board authorized the 14-million-share common stock repurchase program in September 2006, Arch has repurchased a total of 3.1 million shares.

Arch Coal was trading today @ 16.63, roughly 1/2 of what they paid for the stock that they bought back. Talk about a bad investment! They bought 1.5mm shares at 35.62 for a total cost of  $53,430,000 and today that’s worth $24,945,000.  They lost a cool $28.4mm of shareholder value.  They would have been better to pay down their debt;

Just like Arch Coal, there’s hundreds of companies that have made the same stupid decisions and these decisions are costing the shareholders a lot of money.  If you see any more stupid ones, send me a comment and I’ll post them.

Subscribe by RSS Subscribe by Email