Ebb & Flow

Amgen (AMGN) is no stranger to stock buybacks, but for only the second time, the bellwether has dipped into the debt market to supplement its share repurchases. Investors are on board with the move, which essentially has the effect of borrowing money and giving it to the shareholders.

In late 2004, AMGN raised $2 billion of debt and said most of the proceeds were earmarked for stock repurchases. At the time, AMGN said it thought the debt-funded stock repurchase made sense because the company's stock was undervalued (see BioCentury, Nov. 22, 2004). Many Streetwatchers agreed that by leveraging debt, AMGN was sending a very strong signal about its views of its stock price. ...