Wednesday, October 17, 2007

Kudo's to Boone Pickens

Boone Pickens appeared on CNBC's Squawk Box this morning as a respected guest commentator. He hit the nail right on the head when speaking about stock buy backs. To paraphrase he made the following comments. CEO's are in fiduciary positions of responsibility beholden to the shareholder. When CEO's start stock buy back plans the investors needs to ask what does the CEO know. He feels that the CEO is in a preferred position because the CEO has better information. Therefore the buy back is not truly in the investors long term interests. He concluded that if CEO's need to deal with excess cash they should pay dividends, or expand the business, or make acquisitions into new area's.

His message is that the CEO should not be betting against his own shareholders. Imagine that CEO's working for the shareholder. Boone you're OK.