Tags: stock | buybacks | record | 1.1 trillion | share repurchase

Stock Buybacks Hit Record $1.1 Trillion

share buyback, is a company's buying back its shares from the marketplace.
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By    |   Wednesday, 19 December 2018 09:09 AM

Announced corporate-stock buybacks reportedly have hit a record $1.1 trillion, and already about $800 billion of that has been purchased.

That leaves companies with another $300 billion of stock to buy, and several companies have announced plans to buy shares after the recent market drop, CNBC reported.

Recent stock buybacks have been launched by companies such as: Lowe's, Pfizer, Facebook, Boeing, Johnson & Johnson, Universal Health Services, Shoe Carnival, and Playa Hotels.

Stock buybacks refer to the repurchasing of shares of stock by the company that issued them.

Corporate buybacks also are a sign CFOs believe their stock is undervalued, CNBC explained.

"Traders tell CNBC much of the buying is based on the belief that the recent spate of selling is due largely to political issues (Brexit/China tariffs/Italy) that will resolve favorably and that global economic weakness may not be as pronounced as markets believe," CNBC reported.

To be sure, economic guru Jamie Dimon agrees with that assessment.

The chief executive of JPMorgan Chase & Co. recently said he favors using the bank's excess capital to reinvest in its business instead of buying back stock.

"Stock buyback, in my opinion, is a very good thing to do when your stock is cheap," he said recently at an investor conference hosted by Goldman Sachs Group Inc. (GS).

"The highest and best use of our capital is reinvesting it and we are starting to do that now," Dimon said, citing additional spending on technology, branches and loans to small business as examples, Reuters said.

"This notion that you should buy back stock at three times tangible book value as a return of capital to shareholders is crazy," he said.

Meanwhile, Bloomberg Opinion's Barry Ritholz examined the philosophical differences between the fans and foes of buybacks.

As a group, companies that repurchase shares are good investments even as individual companies squander their money, he said.

"Collectively, buybacks enhance performance. But on a company-by-company basis, investors need to be on the lookout for buybacks that substitute for good decision-making by management," he wrote.

"This is especially true in hyper-competitive industries where there are existential threats to a company’s survival. This is surely the case for both GE and GM, and maybe even for Apple."

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Announced corporate-stock buybacks reportedly have hit a record $1.1 trillion, and already about $800 billion of that has been purchased.
stock, buybacks, record, 1.1 trillion, share repurchase
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2018-09-19
Wednesday, 19 December 2018 09:09 AM
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