Unforseen

Share purchases do not change the shareholder share of the company. But what has changed is that the company transfers cash to the shareholder. Transferring cash to the shareholder is the same as a dividend payout. Thus, share purchases is *equivalent to a dividend distribution. Thus, the % reduction of shares outstanding has a positive effect to the expected return just as the dividend yield has the positive effect on the expected return.

*This is L2 material.