Zeev's Turnips Patch-No Politics (ZEEV)

[Zeev Hed]

Repurchase of share is a legal way to avoid paying taxes on dividends. Look at the history of buybacks from MRK ($25 Billions of repurchases over the last 5 to 10 years, almost 75% of the cumulative retained earnings, it should have been paid in dividends, but then Uncle Sam would have collected about $10 B, and why should nice shareholders such as I be burden with sharing the tax burden of this country? (g). Options, apart of being an incentive for employee (and more so for top management), is a way to distribute shares to the pubic without paying the typical 6% to 15% in underwriting fees, a very low cost way to do secondaries without the street being involved. Now, many companies will tell us they buy back shares because it is the best "investment" for the excess cash they have, or to compensate for options, but that is simply not the case. Buying your shares at a fat multiple to book, dilutes the book value of the remaining shareholders buying under book makes sense since it increases the BV of the shares).