Book of the day - The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success by Brian Troxell
This book was great, but by the end of it what I kept hearing was how these CEO’s performed stock buybacks and were smart about corporate tax strategy. It seemed every CEO had the same secret sauce to being an “Unconventional CEO” and that secret sauce was to perform stock buybacks.
That’s great and in many cases, when interest rates are at all time lows, it makes sense to perform stock buybacks on what is essentially cheap borrowed money. 2018 was a record year for stock repurchases and it made this entire book timely, but not unconventional. The Outsiders seemed more like the norm in today’s business strategies.
Beyond buybacks The Outsiders has a great argument against dividend paying companies. In effect this book has influence my own opinion on companies that pay a dividend. If the company has nothing better to do with its money other than pay it back to shareholders via taxable events, that’s a pitiful use of the funds. The Outsiders had some of the smartest corporate tax strategies for how to return profits to shareholders without the tax hits.
A simple example could be if a company wants to return profits to shareholders, the company can perform a stock buy back therefore increasing the price per share. This allows shareholders to sell stock when they are ready vs. being forced to take a taxable dividend payment.
In the end this book shed light on corporate tax strategies and how business leadership is responsible for helping guide the ship for shareholder value.