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Yeti-420-69 t1_j28xy1t wrote

Reply to comment by Hapankaali in [OC] Apple’s cash flow statement visualized by giteam

I get that this isn't an investing sub but guys.. come on.

If it's good for them it's good for all shareholders. It is their fiduciary responsibility to do what is best for shareholders.

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Hapankaali t1_j294uzl wrote

It's good for the shareholders' bottom line short-term, but can be bad long-term if good investments are withheld.

Of course the owners of the company (and their proxies, i.e. management) have every right to cash out now when the company is doing well and it's understandable they care more about nice things now than the future of the company, but to suggest this is somehow a "responsibility" is some bizarre balls-gargling.

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Yeti-420-69 t1_j298gf0 wrote

It is literally illegal for them to not do what's going to provide the best return to shareholders. Shareholders would need to take issue with whatever action was taken and take the board to court, but nobody is doing a stock buyback to personally enrich themselves.

You've mangled so many terms here I don't know where to start... Do you think there's a difference between owners and shareholders? Cashing out means selling shares, doing a buyback relies on the market to uphold the current valuation and increase the share price to keep the market cap level. If the market thinks insiders are only doing the buyback to 'cash out' and that it's not in the best interest of the corporation, that won't happen.

I'll let you get back to childish insults now.

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A_PlantPerson t1_j29f9qv wrote

>It is literally illegal for them to not do what's going to provide the best return to shareholders.

That is an often repeated misconception. A director has a duty of loyalty and care. As long as any decision is made in entire fairness or approved by an independent director courts historically give a lot of leeway. And rightly so. Firstly because most decisions that increase shareholder value on an arbitrary timescale are undesirable and a lot of decisions that will have a negative impact on shareholder value on an arbitrary timescale might still be very attractive. Secondly, it would paralyze the decision-making process.

Just like dividends- share buyback is- in theory- a value-neutral transaction for shareholders (except some tax benefits) but it is a pretty bad signal to give for a tech company imo (what apple is communicating to shareholders is that they can't find a better way to invest the money that would generate value) and has some inherent risks for the company.

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Hapankaali t1_j29gxxy wrote

>It is literally illegal for them to not do what's going to provide the best return to shareholders.

Yes, management famously only takes decisions that are best for the company. All they have to do is pinky swear that they believe they are acting in the best interests of the company.

>nobody is doing a stock buyback to personally enrich themselves.

Well, except for the ones who are.

>Do you think there's a difference between owners and shareholders?

No? God forbid people use synonyms!

>Cashing out means selling shares

No, not necessarily.

>doing a buyback relies on the market to uphold the current valuation and increase the share price to keep the market cap level

So what?

>If the market thinks insiders are only doing the buyback to 'cash out' and that it's not in the best interest of the corporation, that won't happen.

"The market" thinks Bitcoins are worth $16,524 and that Gamestop increased in value more than 50-fold in a few months' time.

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