More than 30 Washington area companies have announced stock buybacks in the four weeks since the stock market collapse, joining a national trend of repurchases designed to take advantage of lower stock prices.
Among the companies announcing last week their intentions to buy back shares of their own stock were Riggs National Corp., which said its board authorized the repurchase of up to 500,000 shares of its common stock during the next 90 days.
Buybacks proliferated in the days immediately following the market collapse on Oct. 19. But repurchase announcements have slowed recently.
In many cases, according to analysts, companies were planning to buy back stock anyway and seized on the lower stock prices to hold down costs of the repurchases. Companies buy back stock for a number of reasons, including funding stock option plans, acquiring stock that might be used in the purchase of another company and bolstering the market value of their stock.
When stock prices plummeted, repurchase announcements also served as a way to communicate to investors management's confidence in the underlying value of the stock.
Many of the area's largest companies have announced stock buybacks in the wake of the stock market collapse, including UNC Inc., USAir Group Inc., Fairchild Industries Inc., Hechinger Co., Smithfield Foods Inc. and The Washington Post Co.endqua