10 Stocks Shrinking Shares

Stock buybacks are generally considered a bullish signal on Wall Street. They return capital to shareholders, while declaring management's belief that its own cheap shares are its best return on investment. As long as profits remain consistent, share repurchases can even increase earnings per share, by dividing the same amount of earnings among a smaller pool of shares outstanding.

Today, we'll draw up a list of companies that have announced stock buyback programs, then consult Motley Fool CAPS to see which of those companies the 81,000-strong investor community favors most. If CAPS' top investors endorse the prospects of companies announcing buybacks, Fools should take notice.

Here are some of the latest companies to announce share repurchase programs.

Investors at CAPS aren't particularly fond of this group, as most are rated three stars or less.

A credit blackout?
Until last year, private equity was one of the driving forces behind the M&A boom, making the first half of the year one of the busiest around. However, liquidity issues have since cropped up, with capital-market spigots running dry. Some buyers are now skittish about completing deals they previously agreed to, while others have been unable to raise financing for the deals they want. Private equity firm Blackstone Group has been on both sides lately.

The buyout of private-label credit cards and loyalty rewards program administrator Alliance Data Systems (NYSE: ADS) has been the subject of rumor and tumult. Shares of ADS plunged on rumors that Blackstone might try to renegotiate the terms of the $7.8 billion deal. The rumors were said to be false, and the SEC is investigating the situation. While ADS had said the deal was expected to go through by the end of last year, an analyst downgraded the company's shares a week or so ago on the possibility the deal may yet fall through.

Blackstone also had trouble raising the financing necessary to complete its planned $1.8 billion buyout of PHH (NYSE: PHH) and had to pay the mortgage lender a $50 million breakup fee.

Partly as a result of these missteps, Blackstone's shares have fallen below its $31 June IPO price. That certainly seems to underscore the hesitancy Goldman Sachs (NYSE: GS) was said to have exhibited about participating in Blackstone's IPO underwriting at a lofty valuation. Blackstone shut out Goldman, but perhaps the finance house has had the last laugh. Blackstone's shares may be the one thing the private equity firm can afford to buy today.

Among CAPS investors, passions are easily inflamed over Blackstone. But All-Star flyier4755, with a 98.87 player rating, calmly sums up why the firm is a low-rated company: "[W]ith all the credit worries why should this not go in the same direction?"

On the bull side, All-Star keif, who has a 98.30 CAPS rating, perhaps believes an otherwise good company has come out on the short end of a lot of bad press.

A forgotten stock since its IPO. Low valuation metrics, high quality management, large cashflows, great underlying businesses. Stock price performance may be weak in the short run, but should outperform in the long run.

Foolish fallout
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