Apple Taking a Bite out of its Own Stock with its Buyback Program

Apple has been repurchasing its own shares at what a recent Wall Street Journal article describes as a “furious clip since last year’s tax-overhaul package freed up more than $250 billion” in the company’s offshore bank accounts—and in a recent earnings call Apple said it intended to buy back another $10 billion by the end of June. Given these efforts to “lighten its massive cash load,” the article points out, reaching a market capitalization of… Read More

Buybacks Are Bullish

“If you need a reason to be in stocks right now,” says a recent Barron’s article, “you can look no further than the growing tidal wave of share repurchases.” By reducing share count, the article explains, share buybacks typically support prices and boost earnings per share. “Indeed,” it adds, “shares of companies with big buybacks have historically outperformed the market.” S&P 500 companies, the article notes, are on track to announce $650 billion worth of… Read More

In Volatile Times, Investors are Wooed By Cash

“In a year of rising interest rates, resurgent stock volatility and creeping political risk, many investors are taking solace in dividends,” says a recent article in The Wall Street Journal. As the market becomes increasingly unsettled, the capacity of companies to shell out cash in the form of share buybacks and dividend payments is becoming of key importance to investors, the article says. This is further fueled by the fact that U.S. companies are enjoying the… Read More

The Buyback Binge is Ending

The market is seeing an end to the era of share buybacks to “one where capital spending matters,” according to a recent article in Barron’s. Companies in the S&P 500, it reports, are going to repurchase $500 billion shares this year, the lowest number since 2012 (data from INTLFCStone). The timing for this is appropriate, however, given the slowdown in quantitative easing (which had provided cheap money for repurchases). Higher borrowing costs together with high… Read More

The Weakest Link in Today’s Market

Expending more than you take in works for a diet, but it doesn’t for the stock market. That’s the upshot of a recent Wall Street Journal article by Steven Russolillo, who writes that today’s ultra-low interest rate market is allowing share prices to “stay higher for longer than under more normal circumstances.” What could “end this game” he argues, is the amount of cash companies are paying out to investors–which is now exceeding the earnings… Read More

O’Shaughnessy Emphasizes the Value of "High-conviction" Buybacks Over the Long Term

Jim O’Shaughnessy, O’Shaughnessy Asset Management, says a long-term investor should be buying now, and compares “low-conviction buybacks” (defined as 5% or less) and “high-conviction buybacks” (over 5%) in identifying attractive stocks. From 1987 to 2014, he says, the return on low-conviction buybacks was 12.1% annually (about 1% over return on all large stocks), but the return on high-conviction buybacks was 15.9% annually. Further, he says that the buyers of these high-conviction buyback stocks “were buying… Read More

O’Shaughnessy Emphasizes the Value of “High-conviction” Buybacks Over the Long Term

Jim O’Shaughnessy, O’Shaughnessy Asset Management, says a long-term investor should be buying now, and compares “low-conviction buybacks” (defined as 5% or less) and “high-conviction buybacks” (over 5%) in identifying attractive stocks. From 1987 to 2014, he says, the return on low-conviction buybacks was 12.1% annually (about 1% over return on all large stocks), but the return on high-conviction buybacks was 15.9% annually. Further, he says that the buyers of these high-conviction buyback stocks “were buying… Read More

Corporate Buybacks Largest Buyer of Stock

Last month, Bloomberg highlighted the high level of company buybacks, noting that since the mid-2000s “corporations and investors have switched positions as the bigger buyer of stocks.” Specifically, “inflows from equity funds exceeded corporate buybacks every year in the late 1990s,” but corporate buybacks hit record levels in 2007 and have remained high. The article suggests that “the reluctance of investors to pile into equities has left corporate America the largest source of cash throughout… Read More