Tempur-Pedic Rises Steadily After Morning Share Repurchase Announcement

Mattress and pillow producer Tempur-Pedic

this morning that it has been repurchasing shares in the open market, restoring confidence in the company following

this past Wednesday, June 6. Shares of Tempur-Pedic rose steadily today, climbing more than 14%. This followed a decline of more than 45% on June 6. Share repurchases are often seen as a sign that members of management believe their company is undervalued. If Tempur-Pedic's valuation later rises, the company could achieve profits from its repurchases. Since an information asymmetry exists between investors and management, investors might see share repurchases as a positive signal by members of management, implying that they have a positive outlook on the company. Thus, investors might view repurchases as an occasion to purchase shares themselves. Mattress producer Sealy

traded lower today, closing down around 2 cents or 1.2%.