The KBC Buyback Fund: Beating the Market with Buybacks

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.

Teach students about buyback anomalies and event-driven strategies.