- the source for market opinions


October 2, 2018 | Corporate Execs Using Tax Breaks to Pump and Dump

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

As government revenues fall, deficits compound and debt levels leap, corporate executives have been directing the corporate cash freed up from recent tax breaks to pump up their company share prices with buybacks, while dumping their own personal holdings into the strength created.  ‘So long suckers’, indeed.  Buyers and holders beware, your longer-term financial interests are not a priority here.  See Executives are selling off their company stock at the fastest pace in a decade:

“Companies this year have announced $827 billion in spending to purchase their own shares — well above the buybacks that took place during all of 2007, which set the previous annual record.

‘Insiders have been committing lots of money for stock buybacks, and they’re not doing buybacks because they think stocks are cheap. They’re doing to it to pump up the stock so they can sell it,’ said David Santschi, director of liquidity research at TrimTabs.

…what we are seeing is that executives are using buybacks as a chance to cash out their compensation at investor expense.” In June, a group of senators asked the SEC to review its buyback rules.

Said Santschi: “Insiders are doing one thing with their own money, and another thing with shareholders’ money.”

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

October 2nd, 2018

Posted In: Juggling Dynamite

Post a Comment:

Your email address will not be published.

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.