The KBC Buyback Fund: Beating the Market with Buybacks

Published 29 Oct 2007
Reference 5474
Industry Banking
Region Global
Summary

The case describes the launching of the KBC buyback fund, a mutual fund that aims to exploit the buyback anomaly first documented by Ikenberry, Lakonishok and Vermaelen(1995). It summarizes the empirical results of the study which show positive long-term excess returns after open market buyback programmes. The case deals with the practical problems of setting up such an event-driven fund: marketing, separating firms that repurchase stocks for good reason from those that do so for other reasons, and how to diversify across event time.

Teaching objectives

Teach students about buyback anomalies and event-driven strategies.

Keywords
  • Share Buybacks
  • Anomalies
  • Asset Management