Stock Buybacks Drop for 1st Time Since Market Bottom of ’09

Success may have led to pullback in Q4 of 2011

   

Standard and Poor’s is reporting today that stock buybacks dropped in the fourth quarter of 2011, the first rollback in repurchase plans since the market’s crash in the second quarter of 2009.

Specifically, S&P Indices announced today that member stocks in its benchmark S&P 500 index saw their buybacks decreased 22.8% to $91.5 billion during the fourth quarter of 2011. That’s the first quarterly decline since the second quarter of 2009, when the stock markets bottomed after the financial crisis.

For calendar year 2011, however, S&P 500 companies increased stock repurchase plans by 36.9% to $409.0 billion above the $298.8 billion posted in 2010.

“Companies appear to have finally gotten it right,” said Howard Silverblatt, Senior Index Analyst at S&P Indices, in a press release. “With average share prices declining 14.3% during the third quarter of 2011, companies poured $118 billion into stock buybacks (the most since the heydays of 2007), buying back shares at reduced prices. With depressed prices, companies were able to scoop up additional shares, which reduced the number needed for year-end employee options. In the fourth quarter, with share prices increasing an average of 11.2%, they pulled back.”

Health care and energy stocks were the lone sectors to increase their buyback activity during the fourth quarter, with a 7.5% and 2.9% respective increase according to S&P. Exxon Mobil (NYSE:XOM) was the leader, spending $5.4 billion on buybacks during the fourth quarter — though admittedly that stock repurchase plan was slightly down from its $5.5 billion for the third quarter. Trailing were Amgen (NASDAQ:AMGN) with $5.3 billion in stock buybacks, Intel (NASDAQ:INTC) at $4.2 billion, International Business Machines (NYSE:IBM) with $3.6 billion, and Pfizer (NYSE:PFE) with $3.2 billion.

S&P Indices
S&P 500 20 LARGEST Q4 2011 BUYBACKS, $ MILLIONS
Company SECTOR Q4 2011 BUYBACKS
Q4,’04-Q4,’11
Exxon Mobil Energy $5,422 $170,186
Amgen Healthcare $5,298 $29,149
Intel Corporation Information Technology $4,153 $43,051
Intl Bus. Machines Information Technology $3,581 $81,846
Pfizer Healthcare $3,211 $26,193
ConocoPhillips Energy $3,152 $33,104
Time Warner Consumer Discretionary $1,528 $29,042
Wal-Mart Stores Consumer Staples $1,341 $37,350
News Corp Consumer Discretionary $1,205 $6,418
The Travelers Companies Financials $1,164 $17,599
The Mosaic Co Materials $1,163 $1,163
Chevron Corporation Energy $1,147 $24,042
DIRECTV Consumer Discretionary $1,130 $18,499
Microsoft Corp Information Technology $1,042 $101,201
Philip Morris Int; Consumer Staples $1,005 $21,283
Oracle Corporation Information Technology $998 $16,197
The Goldman Sachs Group Financials $908 $36,148
The Coca-Cola Co Consumer Staples $905 $16,380
Unitedhealth Group Healthcare $900 $21,497
The McGraw-Hill Companies Consumer Discretionary $864 $6,270
Top 20 $40,117 $736,618
S&P 500 $91,461 $2,617,665
Top 20 % of S&P 500 43.86% 28.14%

 


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/stock-buybacks-repurchase-2009/.

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