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Tide turning against buybacks ahead of the market top

FT reports that there has been a change in corporate buyback behaviors, as companies prefer not to deploy their cash to buy back their stocks. While traditionally, companies that engage in buyback behaviors are often rewarded during post-crisis rally, it has been reported that TrimTabs, the US research group, shows that money spent on buying back stock in each of the last two months has been the lowest since January 2013.

And one possible reason is that companies fear that their own company’s stocks may be overvalued. This comes at a time when there are more new offerings in the market, with notable ones being GoPro’s IPO in recent weeks. This begs the question, how long more would the equity rally continue?

Read more at http://www.ft.com/intl/cms/s/0/da7af7d6-fe16-11e3-acf8-00144feab7de.html#axzz36CcgBUKt

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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