Re: Governing.com on passenger rail
Author: Tony Burzio
Date: 03-29-2007 - 16:43
> buying back stock rather than investing in improved plant.
Railroads are ruled by the "cost of money" like any other company. To woo investors, a sum of money invested in CSX must compete with the return on same amount invested in any other way. Buying back stock increases the worth of a share and makes the railroad a more tempting investment option when dividends and stock price are computed. Of late, railroad stock are depressed because of the lagging import stream. While the stock is down, most companies will use this golden opportunity to buy back shares. The shares will be reissued when the market improves. Free money.