Weekly Puzzle #12: GM Buyback
What is it?
GM recently announced a stock buyback of $5 billion. That buyback announcement triggered a wave of hand wringing from pundits and economists, some of whom argued that GM's buyback was a symptom of Corporate America's unwillingness to reinvest and stockholder short-termism. This article from the Harvard Business Review summarizes that view.
In this blog post, I take exception to that view, arguing that GM is a at best a middling company in a bad business. Faced with the choice of investing even more in this business or returning the cash to stockholders, I argue that GM made the better choice.