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How share buybacks work and 3 things to watch out for when a company buys back its shares
By The Fifth Person  •  December 17, 2018
You may have come across the term ‘share buyback’ (or share/stock repurchase) a few times before and wondered how a buyback affects your stock investment. Investors often view share buybacks as a positive move as it typically increases value for shareholders. But what is a share buyback and how does it work? A share buyback is a company buying back its own shares from the open market or directly from individual shareholders, thereby reducing the total number of outstanding shares in the market. Other than dividends, companies usually use share buybacks as a way of returning money to shareholders. So how does it do that and increase value for shareholders like you and me?

How share buybacks increase shareholder value

For example, let’s say a company has 10 million outstanding shares on the market and you own 100,000 shares — this means you own 1% of the company. Let’s say ...
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By The Fifth Person
The Fifth Person believes in spreading a message that financial literacy and sound investment knowledge can help people around the world achieve financial independence and lead better lives for themselves and their loved ones.
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