When companies have extra cash resources and no other investment alternative, they will often choose to buy back their own stock. There are a few reasons why a company would want to buy their own shares back:
- When they buy back shares, there are fewer shares on the market to be traded. The price of each share should then be worth more, and typically, share should pay a greater dividend.
- There will likely be fewer shareholders with voting shares. This may give the company more leverage in making decisions about the future of the company.