A strategy to pay out profits to the shareholders by buying back outstanding shares
A buyback is a corporate action undertaken by a firm where it repurchases some of itsfrom the market. This is done for one of 3 reasons:
- Increase the value of the shares (less supply, same demand = higher price).
- Invest in themselves; owning more shares in the company allows them to experience a higher percentage of the profits.
- Reduce the threat of any by reducing the percentage of the company which is up for sale on the markets.