Executives may not have your best interests at heart.

Share buybacks in the resources sector have not been particularly successful in creating shareholder value. Acquisitions also have a patchy track record. Why does the logic presented to shareholders to justify these actions fall apart?

Piet Viljoen of RE:CM explains in the Moneyweb Market Review podcast, "It's quite a contentious issue because company management that make the decisions on share repurchases are sometimes somewhat conflicted in that decision, in that they are incentivised with share options, and if they can reduce the number of shares outstanding on a per share basis, things might look a bit better."

"But the problem is these buybacks generally happen at very high prices and you can look at Sasol (JSE:SOL), you can look at Anglo American (JSE:AGL), you can look at all those companies that did massive share repurchases when their cash flows are very strong in 2007, 2008 and even 2006 and if you look at the results of that capital allocation ... at the end of the day it's a capital allocation decision - do I buy back shares or do I pay a dividend or do I keep the cash in the balance sheet to use for future opportunities - that's the framework in which that decision happens and very often it turns out to be poor capital allocation by management because of skewed incentives, I would argue."

"All I can say is a general comment - that the longer you're in the market the more cynical you get."

On acquisitions, Viljoen comments, "Most acquisitions are a disaster - we've spoken about this before - if you look at companies that do major acquisitions, most of those are disasters and the main reasons these acquisitions are done and we wrote about it in the last quarter's REview is to build that bigger company because management get paid more in a bigger company than they do in a smaller company, and it's not always in the interests of the owners of the business when these acquisitions are done."

"It's more in the interests of management and that's a problem we have in the market today, that management generally - and I'm speaking very generally here - management have been able to extract excess rent from the system because of disinterested ownership."

"Institutions own the shares - they're not too interested - they shuffle pieces of paper around, buying and selling, they've abdicated the role as owners and management have taken the gap and these types of acquisitions which are value-destroying is one of the symptoms of that process."

Viljoen also commented on the attractiveness of the healthcare sector, government regulation and how it creates investment opportunities and potential new banking regulations (listen here).

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*writer holds shares in Sasol

Write to Chris Blaine: chris@moneyweb.co.za

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