Monday, March 21, 2016

Everyone has seen coverage in the business media (for quite a while now) of companies using their cash to buy back shares of stock. Calcbench decided to take a look at the data to see which companies are spending how much on share buybacks (report here).

The headline is this: Corporate America spent $1.41 trillion on share buybacks from 2012 through 2015, with an average purchase in any quarter pegged at $360 million—although more than half of that $1.41 trillion total came from a small pool of “mega-buybacks” worth more than $1 billion each.

We began by looking at each instance of a filer buying back shares in any of the 16 calendar quarters we examined. That gave us 4,029 “firm quarter observations”—for example, Kimberly Clark is counted 16 times in the dataset because it bought back shares in every quarter; in contrast, Apple bought back shares in only 12 quarters. (We looked for authorized repurchase plans only, and excluded repurchases for employee incentive plans or other purposes unrelated to returning value to shareholders.)

The numbers for each specific quarter differed from one to the next, but the overall trend was clearly upward in both the total dollars spent (from the low $60 billions in the first half of 2012 to an average of just more than $100 billion across 2015) and in the number of firms participating in buybacks (roughly 220 at the start of 2012 to 270 by third quarter 2015).

The single largest repurchasing program, by far, went to Apple: nearly $104 billion repurchased in the four years we examined. Next was Exxon Mobil ($54.3 billion), followed by IBM ($44.1 billion), Oracle ($39.3 billion) and AIG ($29.2 billion).

Another notable phenomenon was the trend of mega-buybacks from a few companies. We tracked 383 such purchases, where the company spent at least $1 billion buying back stock in one quarter. Mega-buybacks accounted for only 10 percent of all buyback programs, but 56 percent of the total $1.48 trillion in buyback dollars.

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