I have to call this out.  Representing this move as an intelligent, strategic corporate decision looks, from the other guys point of view, like you’re spitting in his face.  Via Reuters:

Facebook has crystallized its blunder of an initial public offering with a stock buyback. Mark Zuckerberg’s social network will essentially cut its outstanding share count by about 101 million, or 4 percent, by promising to use cash, rather than stock, to settle a tax obligation.

Facebook will use their IPO cash to pay tax liabilities, a corporate cost stemming from employee stock compensation, then buy back stock, providing liquidity during the time of the expiring insider lockup period.

Hmm.  So they take money from the public, at a price that was arguably a misrepresentation of the value of their business, then use that money to cash out the insiders.  Nice arb.

From a business perspective, they have been cash flow positive on an annual basis, but this would indicate, to me, that management is either too apathetic to find better investment uses for this money to provide shareholders with a future return, or that the business they are in does not offer the opportunity.  The other, remote  possibility, one doesn’t want to be forced to consider, is that the whole model is a fraud and going down the tubes, women and children and insiders first.

Whatever the case, I am more skeptical today than yesterday.

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For information on Alhambra Investment Partners’ money management services and global portfolio approach to capital preservation, Douglas R. Terry, CFA is reachable at: dterry@4kb.d43.myftpupload.com