When cash-rich corporations authorize a share repurchase program, investors tend to see the move as a sign of confidence in the company's prospects.
Common wisdom dictates that such transactions may carry an underlying message that a stock is "undervalued," leading management to put excess cash to work by investing in their own company's stock. However, buybacks can also be interpreted by investors as an attempt to stave off a drop in share price.
Although stock prices will inevitably be impacted by changes in supply and demand and other market factors, how are common shares affected by a buyback? With data from Capital IQ, CNBC.com looked at some of the largest buyback programs in the past 10 years. Based on a sample of 20 of the biggest deals, valued at a minimum of $8 billion, the results show that stocks were up an average of seven percent six months after the initial announcement.
So what are the biggest stock buybacks of the past decade? How did the stocks fare? Click ahead to find out!
By Giovanny Moreano
Posted 30 March 2010