Share repurchasing, commonly known as buybacks, entails a company repurchasing its own shares from the market, subsequently retiring, or holding them as treasury stock. This strategy diminishes the number of outstanding shares, thereby augmenting earnings per share (EPS) and the company’s stock price, given constant or growing earnings. The efficacy of a buyback, as noted by Warren Buffett, hinges on the share price at which it is executed, buying back undervalued shares transfers wealth to shareholders, constituting a positive outcome. Equally, the converse holds true.
