Apple, the world’s king of stock buybacks, is a value-add for AAPL investors, an analyst says.
The company spent a total of $621 billion buying its own shares between 2013 and 2023. For reference, Google parent Alphabet spent about one third of that figure on its stock over the same period. Over the last fiscal year, Apple doled out $78 billion to buy 456 [million] shares of its stock, reducing its number of outstanding shares by about 2%.
“Given what’s feasible, Apple’s buyback program is actually quite impressive,” wrote James Brumley of the stock investing and stock market research site Motley Fool.
Buyback programs reduce the number of a company’s shares in circulation, which then raises an investor’s stake and their return on future dividends. While investors’ views on share buyback programs are mixed — some companies use them to artificially boost their stock price — stock repurchases executed by companies with competent leadership are usually a good thing. Bankrate’s James Royal writes that “properly executed stock repurchases are one of the best and lowest-risk ways to create value for shareholders.”
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buy backs should be illegal.
They shouldn’t be illegal, maybe there should be some controls. Companies sell more stock when they need funding, why not buy back stocks when they have lots of cash? It seems dodgy when a company losing money borrows money to buy back shares.
Corporate financial manipulation should be a capital offense, or at the very least subject to public corporal punishment, some BS legal window dressing is meaningless.
Yep, and that why buybacks were illegal (manipulation). It also sidesteps who are the real benefactors. Retail stockholders? Wee bit. AAPL C-level and corps? Significantly. It’s the same that cry, “pay your fair share” that love this hide your “fair share.”
Wee bit for retail investors? No. Apple returned 750B to shareholders in divs and buybacks between 2012-2022, which is 92% of FCF over that time. What isn’t said in all this is that Google returned about 5% and Meta virtually none in their buybacks. In other words, Google and Meta are using almost all of it for stock sterilization. Apple uses very little. Yuge difference. Warren Buffett knows this. This was reported by a very competent and reliable source Ben Hunt (epsilontheory.com) in the piece “Stock Buybacks and the Monetization of Stock-Based Compensation”, but it now regrettably behind a paywall.
Total return for retail in buybacks (wasn’t talking divis) is impressive because of the thousands of investors. Give a number for average retail holders and it disproportionally more advantageous to CEOs and Corp level holders. Of course Warren “knows” this and as the largest holder of AAPL shares, Warren loves this. Who wouldn’t love to bag a gain w/o taxation at the time the bag grows? Divi’s are the stepchild comparatively…which get taxed at ordinary income level the day issued.
Underneath all, it’s still stock manipulation…fewer shares, but same value, and company’s EPS rises. No productivity, or new product needed. Wall St magic.
I agree that buybacks should be illegal. That $621 billion could have been paid out to workers, used for R&D, built factories in the US, etc. Instead it enriched shareholders. Nothing wrong with that, but many of the commentators above seem oblivious to the many reasons buybacks were illegal until 1982. Always interesting to me that the timing aligned so well with the hollowing out of American industry.