Question

do companies ever buy back shares, say they buy back 1000 shares, only to resell the 1000? why would they do that, maybe at at higher price? what would they do if they keep some of them as treasury stock? why would a company ever retire stocks?

Answer 1

Company buys back its shares for a variety of reasons like:

• It wants to regain ownership that lies with the investors
• Reduce the cost of capital
• Free up profits to announce bonus
• Gain from a temporary under valuation of stock etc.

Thus, It is not necessary that the company will buy back 1000 shares only to resell.

Yes, they may be in expectation of higher prices in the future, and wants to make gains on its own account.

A compamy buys back its shares from the market and reduces tyhe amount of shares outstanding.

A company would retire stocks when it wants to cancel the available shares.