Earlier this week, a Chinese pharmaceutical play, American Oriental Bioengineering Inc. (AOB:NYSE) , announced that it will buy up to $75 million worth of its common stock.
This is great news for investors. AOB was sitting on some extra money. This left the company with a few options. It could have paid its shareholders a dividend, looked to buy out another company, reinvested it in R&D or simply bought back its own stock. AOB decided to repurchase its own stock.
That means only one thing. Management thinks its shares are cheap. That’s great news. No one knows a company better than its own management. This recent piece of news reaffirms putting your money where the inside management has decided to put their money.