Companies often like to conduct share buyback programmes because they reduce the amount of outstanding shares and thus drive up earnings per share.
However, corporate America – along with hedge funds, institutional investors and others – appears increasingly nervous and is choosing to hold on to cash.
“Even as they entered this downturn with record cash on balance sheets and low levels of long-term debt, they are not willing to use that cash to buy back their shares at these prices yet,” said Charles Biderman, chief executive of TrimTabs Investment Research. “That's not a good sign.”
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