With Stocks Buybacks Halted, We’ll See How Much They Matter
https://www.bloomberg.com/news/articles ... emium-asia
“U.S. firms have been the biggest incremental buyer of stocks in each of the past four years, with their net purchases exceeding $2 trillion.
Hedge funds and risk-parity funds have reduced their equity exposure considerably. But institutional active funds and passive products have room for further outflows.
The fiscal bill passed by the US government also allows individuals to withdraw up to $100k from their 401k, without penalty. We believe this could result in over $50bn of further outflows from the retail community.
As well, over 50 companies in the S&P 500 have already suspended their share repurchase programs, which accounted for over 25% of buybacks in 2019.
The 10 biggest repurchases for S&P 500 Index companies last quarter totaled $86 billion, up almost 30% from a year earlier, led by Apple Inc., Meta Platforms Inc. and Google parent Alphabet Inc.,
The technology and communication services sectors, which typically have the biggest cash flows, are leading the way.
Major banks, which ratcheted up repurchases in the last year, will likely join the top spenders when they publish their numbers in the coming weeks.
S&P 500 firms are expected to have bought back at least $265 billion in stock in the fourth quarter. That exceeds the third quarter’s all-time high of about $235 billion.
Buybacks may exceed $870 billion for 2021. That would eclipse the record of $806 billion from three years earlier.
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