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With Q3 Buybacks Surging, These Are The Top 20 Repurchasers Of Their Own Stock
Back in September, when we looked at the total amount of stock buybacks by S&P 500 companies, we observed that the "Buyback Party Is Over: Stock Repurchases Tumble In The Second Quarter" - according to CapIQ data, after soaring to a record $160 billion in Q1, the amount of repurchased stock dropped 20% to "only" $110 billion, which perhaps also explains why the market went absolutely nowhere in the spring and early summer. Our conclusion was that, if indeed this was the end of the buyback party, then "the Fed will have no choice but to step in again, and the central-planning game can restart again from square 1, until finally the Fed's already tenuous credibility is lost, the abuse of the USD's reserve status will no longer be a possibility, and the final repricing of assets to their true levels can begin."
As it turns out our conclusion that it's all over was premature (with the Fed getting some breathing room thanks to desperate corner offices eager to pump up their CEO's equity-linked compensation), and as the just concluded Q3 earnings seasons confirms, what went down, promptly soared right back up, with stock repurchases in Q3 surging by 30% following the 30% drop in Q2, and nearly offsetting all the lost "corporate wealth creation" in the second quarter, with the total amount of stock repurchases by S&P 500 companies jumping from $112 billion to $145 billion, just shy of the Q1 record, and the second highest single quarter repurhcase tally going back to 2007, and before.
So who are the most glaring offenders of engaging in what James Montier calls the "World's Dumbest Idea", i.e., maximizing shareholder value almost entirely through buybacks?
Here are the 20 S&P corporations who repurchased the most stock in Q3...
... And in 2014 through the end of Q3.
Incidentally these are also some of the best big name "performers" this year. When the wind turns and the selling begins, we urge everyone to short these names first.
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Apple tops the list, buying back $40B, and it's still like they dropped a penny or something compared to their hideously over-inflated market cap.
These stock buybacks are nothing more than "bust outs". See 'Goodfellas' for the definition of "bust out".
When interest rates finally go up, these companies will be finished almost immediately.
here ya go...
One of my favorite and most truthful scenes, based on a true story after all...
https://www.youtube.com/watch?v=ZPtjyqgZAUk
When 'someone' took over the US government, they decided to 'bust out the joint'. Load it with debt, and loot everything thats not nailed down! Some will say LBJ, I say we go back to at least the founding of the Fed.
If you want to go back further, I suggest looking at they City of London, around the time of Napoleon's defeat...
LBJ = Little Baby Jesus?
They never let an opportunity go to waste, neither does the Catholic church.
Ah, the economic sails are luffing in wind already.
Conspiracy Fact: UN reports confirm Israel aiding ‘rebels’, Al-Qaeda groups fighting in Syria
Why don't you show us on the doll where the Rabbi touched you.
LeBron James, you ignorant dunce.
That sounds attractive, but I don't think it's accurate. You after all, aren't talking about just the U.S., but the entire West, and even Japan, and China for that matter. They may "bust out the joint", but are they going to enjoy all those riches in Somalia, or maybe Afganistan? I don't think so. They are simply too stupid to realize they are busting out the world, until it's too late. Think more mindless feeding frenzy, than evil master plan.
Actually a few of these are because the companies are so insanely profitable and the growth prospects so low there's no CapEx happening. Look at Intel, for example, 60% margins (and real margins, not accounting tricks), and cutting CapEx because there's no growth so they don't need more factories. They're swiming in cash each quarter so they're dumping it into buybacks.
I don't think buybacks are bad, per se, but for companies that are profitable it just shows they're better off buying stock back than investing in CapEx, and that shows how bad the economy really is rather than the corps gaming the system.
If there truly were growth, they'd be building factories and not buying stock.
I looked at IBM a few months back; with gross margin at an industry leading 49% and collapsing demand from Asian markets, they had nothing better to do with all that cash than buybacks. last year alone they levered up by 20% and drew down free cash flow by some 16 billion for the reasons you pointed out.
You're right that the problem is macro-economic; at least these 2 companies are still being well managed, there just aren't many opportunities on the horizon.
We should all be buying back our own stock. I understand the appeal of easy money but if you want real wealth I would think the best plan is to invest in one's self. And I'm not talking flat screen TVs. Self employment. We all do what we must but we have far more discretionary wealth than we allow ourselves to believe. Its simply a matter of our wants being confused with our needs. Stumbling through life without a plan makes us all easy targets for those looking to profit.
And what's the compensation package to the Officers, Sr Managers, and BOD in stock bonus of these companies compared to their base compensation? An HR Mgr told me years ago "What gets rewarded, gets done". When officers can vote themselves virtually unlimited compensation tied to stock bonus plans, then you see unlimited effort in raising the stock price. Hence stock buybacks to the exclusion of stodgy old business practises like organic growth and CapEx.
The interest rates are never going up. Corporate America will be all private in a while. The corporations run the government. Their debt will be transfered to the taxpayers. We are so fucked.
If you want to describe the NWO/Bilderberg/TPTB power structure succinctly and as easily as possible to the average sheep all one would have to do is show them that list of companies with an "=" and the all seeing eye at the top of the pyramid.
With Apple it's about control and lots of it.....
Good to see Monsanto up there. Eat that.
The new QE plan, reduce all availble stock on the market and the price will have to go up with out quantitative easing.
Exactly, it's now corporations that are fedding themselves.
Corporate tax subsidies are keeping a large percent of those companies viable, the tax payer is footing the bill as usual. Fascist Corporatocracy
right up until the last shareholder sells anyway...
"winning"
But I digress, ZIRP is QE!!!!!!!!!
well, at least for those in the club who can still access money for 0.01%...
I can see it now;
So, have you purchased any equities lately?
Why yes, I now own Apple.
How many shares did you pick up?
No, you misunderstand, I own Apple.
at this rate Apple will be privately held
At this rate everything will be privately held. That's why you see me post up comments like "better buy stocks before there aren't any". Who in their right mind would even WANT to be a publicly-traded company these days if there was ANY other way available to get the capital they need?
The market is begging for more buybacks.
People are begging for jobs. Guess where all that multiplying economic effect of capex and job hires go? Well back to the shareholders of course!
But it MUST be fine right? Dow at record high!
Main Street hasn't got a clue. oh enjoy your cheap gas! Be sure to buy shit you don't need for holidays with the savings.
And shhhh don't tell everyone their healthcare costs are going up a lot next year.
LOL, one of my "I love Obamacare" liberal friends just got their new rate quote.
Up 40%.
How do you like me now...
private chinese doctor will cost less
Stupid ass Chinese doctor intubated my premature born son and stuck it in his stomach. Took one of them cracker doctors to recognize it....
Serves them right. We have been taking it in the poopchute for a while, about time they get some balls slapping against their backsides.
pods
So stupid and irresponsible.
What are "earnings"? Ad what's an "earnings season"?
Living standards just keep falling...
Home Depot borrowed over $5 billion in 2014 to repurchase their stock at the FATH. Can't make this stuff up.
its called insider knowledge! you know that, I know that... scorched earth is in full swing... borrow lots of empty usd... before it becomes worthless..
And the insiders are selling it out the back door just as fast.
http://finance.yahoo.com/q/it?s=hd
So little demand...so much supply (to buyback)
buy more Stawks...
if ur a fucking moron that is...
UBS Group AG (UBSG), facing the threat of competition from Google Inc. (GOOGL) and Amazon.com Inc., has turned to a Singapore-based technology company that uses artificial intelligence for help delivering personalized advice to the bank’s wealthy clients.
Sqreem Technologies Pte. Ltd. beat some 80 teams competing in the Innovation Challenge, a contest organized by Switzerland’s biggest bank that offered S$40,000 ($30,000) and a potential contract to the winner. Their task: Extract the information most relevant to an individual client from an explosion of data and deliver this tailored content to clients’ mobile phones, iPads and other digital devices.
“Banking is one of the most rudimentary industries when it comes to digitalization,” Dirk Klee, chief operating officer for UBS wealth management and responsible for digital initiatives, said in an interview. “EBay, Amazon - everything is getting more and more digital. The question is how we translate this into a similar experience for our clients.”
Big global banks like UBS are turning to technology to mine data for insight on its customers that could help lenders stay competitive in the digital era. The introduction of mobile payment systems offered by Internet giants like Google Inc. (GOOG) and Apple Inc. has alerted traditional banks to the potential threat from tech companies with vast databases and the knowhow to exploit them."
http://www.bloomberg.com/news/2014-12-07/ubs-turns-to-artificial-intelli...
LOL!! but the robots told me to buy!!!
exactly...
markets???
what fucking markets...
Considering the derivatives "market" I simply don't see how it is going to be possible to keep all these paper claims on real goods from seeking those real goods out soon...
tick tock...
So your saying we are even more vulnerable to an emp event than ever before?
Corporate America is going private.
"Job creators" at work.
"We're takin' over The Carter"
- Nino Brown
Remember that one?
"I wanna shoot you so bad, my dick's hard!"
Scotty Appleton
And doing it on taxpayer dime.
i will short the shit out of disney ... just for having to have sat through "frozen"!
Don't short until the Big Apple breaks wind
Why is frozen so popular, and why are references to it infesting public areas everywhere?
Isn't this the snake eating its own tail ???
Pull it! No wait, wrong thread.
Still applies though. Bunch of insiders scalping the taxpayer through either insurance fraud or insider buybacks, so the thread is irrelevant because it's all a big ponzi.
The FED is bluffing when they say they will raise interest rates.. How could they raise rates on all that cheap QE money out there used for stock buybacks ???
It could bankrupt some of these companies with even a 1% rate hike!
Bankruptcy is so 1970's. The trend for the last 30+ years is to establish TBTF, just like the monopolies at the start of the Industrial Revolution. Only this time, because of globalization, there will be no antitrust laws to break up TBTF. Instead we have taxpayer funded bailouts BECAUSE of TBTF. The perfectly designed oligarch system.
BK rarely involves liquidation nowadays. It means ditching debt, including pensions.
There is something about watching a snake which has grown to be so hungry that it starts to eat its own tail ...
you do not know exactly how the situation will terminate,
but you are pretty confident that things will go badly for the snake ....
Haven't seen you post in a while. Just a break from ZH for a bit?
The Mainstream really doesn't like it when their consumer stock darlings start stumbling...
iTouchMyself
Company's have been buying back their own stock for 200 years. Why do you think the economy grew 3%, yet the S&P EPS grew for 6% for the past decades? Buybacks.
What I would like to see is a chart of which companies issued the most stock to their managers and employees. Repurchasing stock isn't bad per se. But lots of companies seem to be using stock repurchases to cover up the large gifts of stock to management.
Oligarchs must be made somehow, biggest fucking welfare queens on the planet.
Ssssshhhhhh!! You just let JNJ's secret out.
Fucking ad on right side of browser window says:
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Apache/2.2.15 (Red Hat) Server at www.smartlinks.dianomi.com Port 80 Thanks, Tylers. I won't have to shut down my browser for the 8th time today. For Jeebus sake, enough with the video ads. They're shit anyhow.I get ads for Russian brides and Flo. I'm not interested in either.
use firefox with adblock
I used to have this problem as well. I switched to Kaspersky Internet Security. It blocks ads on most websites. My zerohedge pages have no ads at all. The best place to buy it is:
http://www.buycheapsoftware.com/details~productID~5415.asp
Get adblocker at mozilla.com It'll stop all that pop-up/video crap. It is free.
Adblock+Ghostery+Flashblock are your friends.
If they buy back the stock with cash it is mostly harmless - except that it cashes out stock awards to insiders. Except for that, it's a reasonbly good thing for stockholders. If they paid the same money as dividends it could never be taxed at lower rates as capital gains.
If they buy back the stock with cheap borrowed money, then when interest rates rise you may want to sell because *they* may have to sell.
But just when selling starts for non-interest rate reasons, I don't see the relevance.
Also you may want to normalize the chart for the size of the capitalizations involved.
From my perspective, stock repurchases mean that management should be fired, since they can find no better use for capital than to buy back shares of the company itself. No innovation, no creativity, no new hires, no new expansion, no new business opportunities.
It's largely because the Fed has enriched the banks and then the major corporations with so much cash they simply don't know what the fuck to do with it all.
Fucking stupid bastards, much like the people around me, from whom, I might add, I will soon be departing. I have no need for teachers, cops, mailmen or anybody on a public payroll.
I'm at a point in my life that I'm just about fully disgusted with everything. Can't even get interested in a sporting event anymore. Turn a game on and then go read a book or do something else. When it's over, I don't really care.
Guess QE, ZIRP and 15 years of corruption has certain psychological effects as well. Well, fuck 'em. I don't give a shit anymore.
So if a company has extra cash you think management should just force some expansion that is not really needed, start a new business that they know nothing about, acquire some company, hire some people even though they don't need them.
Great plan - you should be a CEO.
You do realize most of these companies are borrowing at near 0% to buyback their stock--even with cash onhand parked overseas. This should end well.
I said if they have extra cash - not that they should lever up and borrow to buy back stock. Even at very low rates I think that is a foolish use of capital. Some day interest rates will go up.
I have sometimes thought (say I am 80/20) - a company should be required to adjust managements stock options for buybacks -- sort of like they do when a company does a reverse stock split.
Management should not get to borrow now to get a bigger bonus - then leave before rates go up and the SHTF.
I hate regulation - but think the board of directors could step up and mandate this.
I have personally seen many businesses get into all sorts of deep shit - including bankruptcy - because they thought they had to grow the business no matter what. Build a new plant - expand into a new area - jump into a business that they don't really understand - just because they had so much cash.
Lost count of the number of acquisitions that have been done by ego driven CEOs - because they had too much cash - they bought stuff that didn't fit and then overpaid for it to boot.
Companies are afraid to invest with all the new laws, rules regulations etc that may destroy their profitability. I wouldn't start a business in this climate.
Disney. A mousetrap for humans...
OK Quick quiz. If you were the CFO of a company that had been speculating in its own stock you would A) Keep buying to pump your options until year end binus time. B) Keep buying but also start buying puts. C) Warm up the G5 with fuel for Panama and dump those puppies like shit through a goose.
Totally OT: Possible explanation for banker deaths:
http://wallstreetonparade.com/2014/12/slain-massmutual-executive-held-wa...
Who holds life insurance on bankers?
With the stock markets on the verge of collapse, I fond it ironic that these companies are buying back their stock at the peak of the market. No a wise move by any measure.
DOW Historical update
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
Short term update
http://www.globaldeflationnews.com/dow-jones-industrial-averageelliott-w...
Most of those stocks are near multi-year highs. What idiotic managements they have to buy so heavily into the run-up.
Just like almost every thing - buybacks can be good or bad.
If a company is generating excess cash - way over and above its business needs it can be a good thing.
It is a way to return cash to shareholders - and there is nothing wrong with a company generating returns for the people that own the business. If you don't think it is OK for the owners of the company to earn a return on their investment then I will never be able to explain it to you. If you own a fucking business wouldn't you expect to profit from it?
Better than building a new lavish corporate office - over paying to acquire some company that you will later have to write off.
On the other hand -
Borrowing vast sums to buy back stock just so the employees with stock options can get paid more is beyond stupid.
Who sold them back?
It's all the remaining outstanding shares. Has the added bonus of making P/E look better than it should be.
Wealth transfer, my friend.
You've got to look like your worth something when the commie reds come around to take you. Either that or they just needed something to do to show they did something. The only stocks worth having are the ones on your rifles.
These companies management are lining their own pockets by selling into their buybacks.
I bet all the CEOs of these companies received a nice bump in pay seeing how they were at the helm when the stock price was driven up. It takes a lot of balls to give yourself a raise based on a false price evaluation.
It's the American way.
Many of us would like to see a graph of the EPS of those top 20 S&P stock buy-backers for the past 4 qtrs without the buyback effect, vs what was reported. Anybody?
Of course. This is the reason Buffet, Gates, Soros were such big supporters of Obummer. And the dumbass sheeple thought Obummer was for the poor folks,,, LOL
Will Smith - Gettin' Jiggy Wit It
http://www.youtube.com/watch?v=3JcmQONgXJM (3:49)
Wall Street circle jerk
Tops only happen when I'm about to purchase a house. It's probably a top but this time I ain't buying it.
Since I's got no money lookinin the mirror accomplishes much the same.
Ok Ok I promise to talk sensible from now on. This article seems to indicate that equities in these corporations are climbing due not to the profitability of sound economics but instead because the acquisition is actually a transfer of wealth to their shareholders and the direct result of FED policy. This is not a strategy that can last and therefore their performance over the long term will suffer.
You know what? It's FED software and that's all I'm saying. Believe what you like.
That list pretty much accounts for market index/pps run ups doesn't it?