“Apple began buying back shares in 2012, paying market prices for its stock and then destroying those shares,” Dilger writes. “That process makes the remaining shares in the company more valuable, effectively returning the value paid to shareholders. This benefits outside investors in the company, as well as its employees who hold shares. It also enables Apple to recruit talent because it can offer valuable stock options. Buying back shares is effectively an investment in the company itself.”
“Since 2012, Apple has spent a total of $199.6 billion in share buybacks. Over the past two and a half years, it has paid between $6 and $11 billion per quarter on both open market and Accelerated Share Repurchase programs to buy its back stock. In the most recent quarter, however, Apple spent an astounding $23.5 billion on stock repurchase, more than twice its recent pace,” Dilger writes. “Apple’s $23.5 billion stock repurchase — in a single quarter — is nearly 8 times the size of its largest-ever acquisition (Beats)… While unprecedented in sheer scale, Apple has previously dropped massive coin on quarterly buybacks after analysts dragged the company’s stock down with irrational fear mongering, often rooted in panics built on channel check mumbo-jumbo.”
Read more in the full article here.
MacDailyNews Take: What mechanism stops Apple from dropping, or having their suppliers drop, some negative news here and there for mouth-breathing analysts and pundits (who love to extrapolate all sorts of theories from single data points) to run with order to further depress the share price facilitating even greater buyback success? The lower the share price, the more shares Apple can retire.
Surely there are laws against such a thing, but could they ever really be proven and/or enforced? We assume Apple’s sense of morality stops them from undertaking such dastardly deeds, but what about other, lesser companies running significant buyback programs?
Well, regardless of the source(s) of the ginned-up “Apple is doomed (despite all evidence to the contrary)” phases that we seem inevitably destined to endure, the good news is that if you can see the pattern, you can profit from it.