- Goldman Sachs sees S&P 500 stock buyback reaching $650B this year, topping 2007's previous record, according to its portfolio strategy team.
- As a percentage of market cap, buybacks are near an eight-year low and still under "normalized" levels, Goldman analysts Jessica Binder Graham and Christopher Wolf write in "The Buyback Comeback: Assessing the Efficacy of the Spend." The report focuses on three measures of efficacy:
- Share-count reducers: Cutting share counts boosts EPS. Companies that have cut their outstanding share count by at least 25% over the last five years include (AIG -0.9%), (GLW -1%) and (LYB -3.2%); in addition (AAPL +0.6%), (KR), and (AVGO +2.7%) are expected to reduce share counts by 10% or more over the next two years.
- High buyback capture: (BBY -2.1%), (ETFC -1.2%), and (AMAT +0.5%) top the list of those generating the largest "capture", meaning the difference between internal rate of return of a company's buyback vs. an uninformed strategy of straight-lined stock repurchases.
- Value investors: (FBHS +0.4%), (ISRG -0.8%), and (KMX +1%) are among those that are best at "buying low," measured by negative correlation between share price and buyback activity.
- ETFs: PKW, SYLD, TTFS, SPYB, TTAC