Monday, June 24, 2024

Yes, yes — companies spend gobs of money on share repurchase programs. Everybody knows that already. You might even know that already thanks to previous research Calcbench has published on share buybacks, including an in-depth analysis in 2022, an earlier analysis in 2018, or other reports we’ve published over the years. 

Today we offer a fresh take on repurchase programs — looking at the number of shares repurchased, rather than the money spent repurchasing them.

Here’s what we did. Looking at the S&P 500, we compared the number of shares a company had outstanding at the end of 2022 to shares outstanding at the end of 2023. That tells us how many shares “vanished” from the company last year, either through repurchasing programs or some other means. 

Divide that number of vanished shares into the total outstanding at the end of 2022, and you can determine how much a company’s total share pool shrank in 2023. 

Figure 1, below, tells the tale. It lists the eight firms with the greatest amount of shrinkage (quit snickering, Seinfeld fans) last year. 

But wait, there’s more! We also tracked those companies that spent the most on buying back shares in 2023, and of course that group was dominated by tech giants literally making more money than they know what to do with. So we compared that money spent against the number of “vanished shares” each company had; that allows you to get a sense of the average price paid for each share repurchased, and average amount of money the company spent every business day buying back shares. See Figure 2, below. 

Figure 2 certainly gives one pause, as you consider the astonishing amount of money some firms are spending to buy back shares. Google, for example, spent $170.3 million every business day of 2023 (there were 249 of them last year) on buybacks. 

It is not Calcbench’s place to question how companies spend their money, but we do have the data to help others ask those questions. We did compile a spreadsheet for the full S&P 500 (and we should note, more than a few of them didn’t spend any money on buybacks), which is available on DropBox for Calcbench subscribers. Take a look and tell us what else we should be researching!

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