"Smith's argument is simple: by and large, most share buybacks destroy value for remaining shareholders. However, while buyback programmes are undertaken with the intention of creating shareholder value, they often have the opposite effect. How and why does this happen? The simple answer is that companies destroy value because they use shareholders' cash to buy shares trading above their intrinsic value. Alas, this destruction of value is rarely obvious, as both the cash used and the shares purchased 'disappear' from a company's balance sheet after buybacks." - Mahesh from Bookmarklet