Firms that buy back their own stock tend to do well, while those that issue new stock tend to perform poorly. This is because companies are smart about when to buy and sell their stock. When they buy back stock that's undervalued, they make more money. The study found that when a company's number of shares changes, it's linked to how much the stock price differs from its true value. Even after considering this, the returns on stocks after a change in shares are still significant. And changes in shares that can be explained by the stock price predict future stock returns better than other reasons for changes in shares.