Shares Buyback - Does it work for investors?
"the data indicates that of around 70 buybacks in FY19, 75 per cent have under-performed Nifty 50 and 60 per cent have under performed Nifty 500."
Further, 45 per cent have given negative returns. A good example is McLeod Russel which, in FY19, announced a buyback of 4.35 per cent of its shares is down by 90%.
It is fashionable for few companies to announce a buyback when prices go low to boost the share price. But, few does not mean to fulfil that.
PC Jewellers has announced a buyback but could not fulfil when Banks has not given NOC.
So, do not rush to buy stocks when you see share buyback news. It may work for intraday traders and BTST traders but not for everyone. As a retail investor, look at fundamental of stocks more than anything else. Buybacks, promoters buy etc are just add little weightage to many many criteria you should look before you initiate a buy call.
In bull market, buybacks and small buy of shares by promoters happen just to boost stocks price by Chor promoters.