Companies Aren’t Buying Their Own Stock

Many companies have curtailed share repurchase plans to conserve cash during the coronavirus pandemic, “removing a crucial pillar of support for the stock market as it struggles to find its footing after a record stretch of turbulence.” This according to a recent article in The Wall Street Journal. “During bad times, you don’t do discretionary spending,” explains S&P Dow Jones Indices senior analyst Howard Silverblatt. Share buyback programs “help boost share prices by reducing the… Read More

Buybacks Not Likely to Slow Down

Market volatility is not likely to slow down the pace of share buybacks by U.S. companies, according to a recent article in The Wall Street Journal. According to S&P Dow Jones Indices, the article reports, firms repurchased $188 billion worth of their own stock in the first quarter of the year, “on pace to be the second-highest amount on record based on data going back to 1998.” And while second quarter data is not yet… Read More

Schumer and Sanders on Limiting Buybacks

In a recent article they co-authored for The New York Times, Democratic Senate leader Chuck Schumer and Vermont senator Bernie Sanders justify what they describe as “bold legislation” they plan to introduce to address the “explosion” in corporate stock buybacks in recent decades. The article contends that companies have become so focused on shareholder value that they have dedicated an ever-growing share of profits to dividends and share buybacks “rather than investing in ways to… Read More

Jain’s Stock Buy a Bullish Sign for Berkshire Shares

A recent Barron’s article characterized last month’s “outsized” purchase of $19.9 million shares of Berkshire Hathaway common A shares by the company’s vice chairman Ajit Jain as a bullish sign for the stock. It says that the “veteran insurance mastermind” Jain seemed to be taking advantage of a 12% decline in Berkshire class A shares from their October high of around $336,000, when he paid an average of $296,515 for 67 shares, the article notes.… Read More

Berkshire Rallies on Share Buyback Announcement

Last month, Berkshire Hathaway’s board announced that its removing a cap on stock buybacks, giving chairman Warren Buffett the freedom to dole out profits rather than continue his hunt for acquisitions. This according to an article in Bloomberg. The article reported that Buffett and Vice Chairman Charlie Munger can “now make repurchases whenever they both believe the price is below Berkshire’s intrinsic value, conservatively determined.’ ” The announcement led to a 3.9% rise in shares,… Read More

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