CBA TA update, page-321

In that case lets agree to disagree on buybacks. Whilst there is somewhat merit that it doesn't change its ability to earn income or its capacity to grow (see factor 2 below); In simple terms, buybacks affects short term supply and demand in the market. Long term buybacks help in the fundamental valuation. It does improve ROE a bit and that in itself is the daddy of all fundamental measure (which slots nicely under factor 3 below). My investments are fundamentally governed in the following metrics and in this particular order of importance:
1.Valuation,
2.Future Growth,
3.Previous Performance,
4.Balance sheet Health and
5.Dividend
In essence buybacks move a positive factor under dividend and moved it 2 notches up in the investment thesis hierarchy. Given the option between a buyback or increase dividend, buybacks wins me over hands down...

Over the 20+ years of investing. There are only 2 points which buybacks are a negative. One is negative to the business itself and the other is to the holder of the stock (i.e. has little impact to the company).
a. To the business itself, an ill conceived buyback is detrimental to Future Growth (factor 2) as it takes away optionality on what to do with the profits at hand and so does dividends by the way... Further to this point, buybacks reduce assets in the balance sheet, if the Equity/SP don't increase as a result. So it may actually be detrimental to the company on factor 4.
b. Those that do not fundamentally value their holding (i.e. speculator not investors) are the ones that get fooled by buybacks the most. Those that only chart will get enamoured by the SP increase and not realise that the MC has not increased will be the main losers of buybacks.

As you can tell, I'm a fan of buybacks (just like Warren Buffett) and will probably talk your ear off regarding it. Anyway lets agree to disagree on buybacks, each to their own as is what a market should be...