Executives of companies purchase shares of those companies when they think they are in for a tumble? Usually they purchase them AFTER they tumble and expect them to rise.
DEFINITION of 'Share Repurchase'
A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. Share repurchase is usually an indication that the company's management thinks the shares are undervalued. The company can buy shares directly from the market or offer its shareholder the option to tender their shares directly to the company at a fixed price.
INVESTOPEDIA EXPLAINS 'Share Repurchase'
Because a share repurchase reduces the number of shares outstanding (i.e. supply), it increases earnings per share and tends to elevate the market value of the remaining shares. When a company does repurchase shares, it will usually say something along the lines of, "We find no better investment than our own company."
Posted by: sarah_oz@yahoo.com
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