Qasim Rashid, Esq.Apr 24, 2023

Bed Bath & Beyond has filed for bankruptcy shortly after spending $1B in stock buybacks & cash payments to shareholders. Employees of 20 years got 0 notice & $0 severance.

It wasn't inflation. It wasn't labor cost. It is 100% corporate greed.

Tax billionaires. Unionize workers. Protect our economy.

Show threadStoney TakesApr 24, 2023
@QasimRashid ban short selling and stock buybacks. Ban short selling yesterday. Why do we even have regulators? What benefit does short selling provide society at large? Unreal this keeps happening over and over.
Show threadwhetstoneApr 24, 2023

@Stoneycase @QasimRashid Short selling is healthy, though. It's good for some investors to have an incentive to bust hype cycles rather than everyone trying to feed into them, drive prices up, and cash out.

100% with you on buybacks, though. I don't see any societal or broad-market value in them.

Show threadOpenDNA⚙️Apr 24, 2023
@whetstone @Stoneycase @QasimRashid Buybacks are an important indicator: they announce that capital gains taxes are too low relative to income taxes, and that management has no ideas for profitable investments.
Show threadwhetstoneApr 24, 2023
@opendna That's actually a very good point. I wish that, as an indicator, it were acted upon by legislators and punished by investors.
Show threadHenry
@whetstone @opendna while I mostly agree, didn’t Dell do a huge share buyback a couple of years ago to restore control of the company? Dell seems to be doing just fine, though I can accept that might be an exception
Apr 25, 2023 at 7:54amMastodon for iOS
Show threadwhetstoneApr 25, 2023
@proji @opendna I’m not sure how regulators could distinguish between buybacks to consolidate ownership/control management vs buybacks to pump up execs’ options *and* make them more liquid, but I agree that there’s a meaningful difference in the motivations.
Show threadHenryApr 25, 2023
@whetstone @opendna as I recall, Dell were quite open about their reasons for buying back. I grant you this would be the exception rather than the norm and as you say distinguishing between motivations would be crucial. I guess it could only be done retrospectively. So Dell would be given a pass where the actions of BB&B would be subject to further scrutiny ie did the board have prior knowledge of this outcome and was the buyback motivated by that?
Show threadwhetstoneApr 25, 2023
@proji @opendna tbh it might just be easiest to ban having options as part of executive compensation at all. pay people actual money based on performance, and remove the motivation for juicing the short term stock price.
Show threadHenryApr 25, 2023
@whetstone @opendna possibly, i think the main idea behind options is really as a “our success is your success” which works great when the company inspires dedication (Apple, Google, Microsoft spring to mind) but works less well with other companies where corporate greed take over.
Show threadwhetstoneApr 25, 2023
@proji @opendna I think options are fine as compensation for people who do not have the power to institute buybacks and other shortcut ways to juice the price. A Google engineer would be inspired to make better products by options; Google execs, on the other hand, have motivation to hack their way to quick boosts unrelated to what's actually good for customers or for the company long-term.
Show threadOpenDNA⚙️Apr 25, 2023

@proji @whetstone The board of BB&B knew the company was loosing money during most of the years it was buying back stock. https://finance.yahoo.com/news/bed-bath-beyond-how-stock-buybacks-undermined-the-company-154202427.html If they still had the cash, they wouldn't be bankrupt.

Why they thought the stock price was so important, I don’t know.

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Show threadOpenDNA⚙️Apr 25, 2023

@proji @whetstone Yes, Dell did announce a buyback program in 2021 and, while not objectionable, I think my indicators fit.

Tech stocks were getting hammered so they transitioned from tech stock to Blue Chip by announcing a reoccurring dividend and a plan to buy back shares (which would get their earnings-per-share to a more reasonable Blue Chip ratio). It was a conservative business play.

But it still said that they had nothing better to do with $5B in cash than bump the capital gains.

Show threadHenryApr 25, 2023
@opendna @whetstone thanks for filling in the blanks, I hadn’t had chance to read up on it so i was recalling from memory. Either way, in the case of Dell it wasn’t a bad thing but in other cases it could well be bad or at least be used as a means of lining pockets at the expense of everyone else