Sometimes the continuing shareholders benefit from share buybacks; and sometimes they lose.  If the shares are bought by the company at a price low relative to their intrinsic value they are going to be value creating for continuing shareholders.
If they are bought at a high price relative to intrinsic value per share then they will reduce value for continuing shareholders.
Here is Warren Buffett’s take on this issue (in latest Letter to Berkshire shareholders):
“At Apple and Amex, repurchases increased Berkshire’s ownership a bit without any cost to us.
The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up.
Every small bit helps if repurchases are made at value-accretive prices.
Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases.
Gains from value-accretive repurchases, it should be emphasized, benefit all owner.......
..............Of course, the difficult bit is estimating intrinsic value. As you have seen in my analyses of the companies I’ve bought into there is usually a range of plausible values, even when sticking to conservative assumptions.
Prof Glen Arnold now offers a Managed Portfolio Service at Henry Spain Investment Services under which clients’ portfolios contain the same shares as his (write to [email protected])
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In his latest letter to Berkshire Hathaway shareholders Buffett wrote about Mr Market causing the stock market to frequently be inefficient in pricing shares. Mr Market throws up bafflingly high prices in some instances – way above intrinsic value – and in others baffling low prices, way below intrinsic value.
We value investors do not trust Mr Market to provide a valuation service. We have to do that ourselves.
Mr Market merely “prices” through its “voting machine” mechanism; often it does not display intrinsic value in those prices through a rational “weighing machine” of the facts (as Benjamin Graham pointed out)
“One advantage of our publicly-traded segment [shareholdings of market-traded companies that are not sufficient for boardroom control] is that – episodically – it becomes easy to buy pieces of wonderful businesses at wonderful prices. It’s crucial to understand that stocks often trade at truly foolish prices, both high and low. “Efficient” markets exist only in textbooks. In truth, marketable stocks and bonds are baffling, their behavior usually understandable only in retrospect.” Warren Buffett, 2023)
So much for the “Efficient Markets Theory” beloved by many academics.
Do not expect to perform really well with all share choices
Buffett goes on to tell us that his experience has been that most of his share choices have been mediocre, some almost ended in disaster.
This should give us some comfort when struggling with our own ........
Prof Glen Arnold now offers a Managed Portfolio Service at Henry Spain Investment Services under which clients’ portfolios contain the same shares as his (write to [email protected])