Enough With The Buybacks, Please!

I’m really getting tired of reading the earnings releases for the third quarter and seeing that Arch Coal (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.

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