This week, I will run you through the most important buyback announcements for the week of May 28 till June the 1st which turned out to be a reasonably slow week in terms of buyback activity.
While consumers and governments across the world are strapped for cash, corporations have plenty. Rather than signal long-term trust and pay more generous long-term oriented dividends, many of them have adopted share repurchases to buy back their own stock. Investors welcome these announcements as they boost earnings per share and provide a lot of support for the share price during the repurchase periods.
Arrow Electronics (ARW) the provider of electrical products and services to industrial customers announced a $200 million share repurchase program, sufficient to retire some 5.4% of its shares outstanding. Since 2006 the electronics distribution company has already spend some $700 million in share repurchases. Investors are not impressed with the latest addition and shares fell in line with the general equity market. So far in 2012, shares have lost some 11%. Currently the company does not pay a dividend.
O'Reilly Automotive (ORLY) the specialty retailer of automotive aftermarket parts announced that its board of directors approved an increase in its current share repurchase program by $500 million. Currently the company is authorized to repurchase up to $2 billion of its own shares. The increase in the repurchase program allows the company to retire an additional 4.3% of its outstanding shares. Shares in O'Reilly have performed strong in the beginning of 2012, now up 16% on the year despite a 10% pullback in recent weeks. The company currently does not pay a dividend.
SLM Corp (SLM) also known as Sallie Mae, the student loan provider announced a $400 million share repurchase program. The program which is sufficient to retire some 6.0% of its outstanding shares comes after shares have seen a pullback from levels over $16 in March to $13.69 at the moment. The timing is a bit unfortunate, as more and more reports highlight the dangers of the "student loan debt" in the country today. At the moment, Sallie Mae pays a quarterly dividend of $0.12 for an annual dividend yield of 3.6%
Tech Data (TECD) the wholesale distributor of technology products announced a $100 million repurchase program. The company has gradually decreased its shares outstanding as it cumulatively spend $1 billion on share repurchases since 2005 at an average price of around $40 per share. The latest addition allows the company to retire yet another 5.1% of its shares outstanding. The company timed the announcement after shares fell from highs of $57 in February to $47 at the moment. Currently the company does not pay a dividend.
During the last week, repurchase activity was rather low with a total announced deal size barely surpassing the $1 billion mark, making it not a particular active week in terms of buyback activity and size.
Cash-rich companies still refuse to significantly raise long-term dividends. Rather, they use one-time repurchase agreements with far less signaling power as a dispersion tool of excess cash to their shareholders.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.