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After delving into the sentiments of British retail investors, Sociables Express has embarked on an exploration of their attitudes towards companies choosing share buybacks over utilising capital for expansion, innovation, and overall growth. With the surge in share buybacks observed since 2015, retail investors are progressively acquainting themselves with the complexities and effects of buybacks. The accessibility of information on the subject, facilitated by a simple Google search and a brief five to ten-minute read, has empowered retail investors to understand the dynamics surrounding share buybacks.

Sociables Express has distilled its findings, revealing that retail investors generally don’t take issue with share buybacks, recognising their role in maintaining stock prices—a crucial consideration for retail investors holding shares. However, a prevailing sentiment among retail investors suggests reservations about companies emphasising share buybacks, interpreting it as a potential indicator of a short-term focus that lacks a strategy for growth and expansion. This sentiment, in turn, has the potential to dissuade potential retail investors, with some viewing share buybacks as a tactic to pump share prices rather than fostering long-term corporate health. Retail shareholders owning stock are happy with buybacks, but prospective retail investors might not feel the same way. 

‘I think some people just buyback to keep the stock up. And that, of course, is insane and immoral.’ Charlie Munger

Looking ahead, Sociables Express believes that share buybacks could possibly escalate into a political issue, particularly impacting companies burdened with substantial pension liabilities. As these companies engage in share buybacks, there is growing political and social concern about the depletion of much-needed capital from industries and economies. The evolving dialogue around this issue implies that companies heavily involved in share buybacks might soon encounter heightened scrutiny and mounting pressure. When it comes to future share buyback programmes, Sociables Express urges companies to factor this in this potential risk. 

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