Led by Apple, technology companies repurchased more shares in late 2020 as blowbacks against stock buybacks eased. In early 2021, however, Investor’s Business Daily reports that financial companies led by banks are emerging as top spenders in corporate buybacks.
Reinhardt Krause for Investor’s Business Daily:
Apple bought back $27.64 billion of its own shares in the December quarter, its first for fiscal 2021, according to Standard & Poor’s. That’s up from $17.59 billion in the fourth quarter of fiscal 2020 and $22.08 billion for the first quarter of fiscal 2020… In all, Apple stock repurchases came to about $81.5 billion for calendar year 2020, about flat with the previous year.
Repurchases of Google stock climbed to $31.15 billion in 2020, up from $18.39 billion the previous year. That includes $7.9 billion in the December quarter.
For the December quarter, reported information technology stock buybacks are running about 12% over the third quarter and 8% over the fourth quarter of 2019, said Howard Silverblatt, a S&P senior index analyst… However, big banks such as Goldman Sachs, JPMorgan, and Bank of America are once again committing to stock buybacks following regulatory stress tests on their balance sheets… “Q1 2021 is experiencing the return of big banks (via Federal Reserve approval), with more non-financial companies starting to venture in to buy shares to cover employee stock options,” he said.
MacDailyNews Note: At the end of April, when Apple reports Q221 earnings (January-March), the company’s board of directors will declare the cash dividend for the year (currently $0.205 per share of common stock and authorize what’s expected to be an increase to the existing program of Apple stock buybacks.
I find it aggravating because I don’t totally understand it although it’s been explained to me. Over $25B for buybacks and only around $4B for dividends. Ouch. It’s just that some of that buyback money could be used for more productive things like a major acquisition or building some assembly plants in the U.S.A. to hire more people or investing in battery tech or even purchasing some BitCoin.
I’m not saying buybacks should stop completely, but it just seems like so much is being done for the sake of Apple executives and the biggest investors who hold the most shares. I may be completely wrong due to stupidity, but it just doesn’t sit right with me for reasons that are hard to explain. There are other people who think constant buybacks are a waste of money, so I’m not the only one. I have to trust Apple knows what it’s doing and I’m not hurting from it. In fact, other than wishing dividends were somewhat higher, I’m doing quite well. It’s just that the paper manipulation of shares seems rather shallow to me. Sorry, but that’s how I feel. It’s not as though big investors are rushing to buy Apple stock just because of Apple’s buybacks. Not at all. There are plenty of companies that investors find more attractive than Apple who don’t do multi-billion dollar buybacks every single quarter.
Why doesn’t Apple pay back some of its debt instead of buybacks. What exactly is Apple waiting for? I’m just completely puzzled as I’m not an accountant.
You’re right, you’re not an accountant and you’re theory is very flawed. Have someone explain it to you again.
You delivered a stiff mort sahl.
Apple has debt only because it’s now cheaper to borrow money than it is to repatriate cash to the US of taxes.
The fewer outstanding shares of stock in the public will make the existing share worth more (altho the last few days in the market hasn’t been indicative)
pay a larger dividend, forget about buy backs. buy backs artificially inflate the share price. do companies say publicly the day, time, number of shares, or the amount of money they will spend on said day to buy shares… if not it seems like stock manipulation. actually even that feels like stock manipulation. perhaps a commit to buy back shares over a min. of two years everyday no matter market condition or share price, but still…
why split, to buy back?
Buybacks don’t “artificially” inflate the price, they actually inflate it, because each share becomes more valuable the fewer shares exist in the market. With each buyback, individual shareholders own a larger piece of the company.
Splits and buy backs are being unnecessarily associated. Buying back a split share is neither more expensive, or less effective per intent/result.
I’d conclude, from your logic, you just want a larger divi, but you’re not making the case…except for stock manipulation. The word choice makes it sounds illegal, though. It’s a legal way to influence price. Legal, but curious, imo.
Buying back, w/o concern, of awareness of share price is lulu. Do you skip buying a wanted item on sale because you’ve committed to buy later when it’s more expensive, but “on your schedule?”
Imagine spending 25 billion on constructing a 3nm chip “fab” plant in the United States instead of on buybacks….
Continually borrowing money that’s used to buy your own stock back in great numbers–with significant funds, is a curious business practice of the 21st century.
If it were capital used for truly advancing productivity, tech advancement, cost cutting measures, or other business growing measures, it would sit better. Instead, it’s an incestuous, share-solidifying and Wall Street insurance plan that supposedly garners higher share value for all. Technically, it does, but in reality it’s used as share-primping. Wall Street demands it when moving the share price becomes a challenge.
I don’t like Apple playing the Wall St. game especially when it’s not essential. Jobs would puke over this.