January 6, 2022

Buybacks: S&P 500 Repurchases Hit Record High in 3rd Quarter

Last May, I blogged about the rebound in stock buybacks during the 1st quarter of 2021.  This S&P Global article says that among the S&P 500 at least, buybacks haven’t just rebounded – they’ve blasted off. According to the article, S&P 500 companies repurchased $234.6 billion of stock in the 3rd quarter. Not only does that that represents a 130% increase over the 3rd quarter of 2020, and an 18% increase over from the 2nd quarter of 2021, but it also shatters the old record for buybacks of $223 billion that was set during the 4th quarter of 2018. Here are some additional data points from the article:

– 309 companies reported buybacks of at least $5 million for the quarter, up from 294 in Q2 2021, and up from 190 in Q3 2020; 371 issues did some buybacks for the quarter, up from 360 in Q2 2020 and up from 290 in Q3 2020.

– Buybacks remained top heavy with the top 20 issues accounting for 53.8% of Q3 2021 buybacks, down from Q2 2021’s 55.7%, down from the dominating 77.4% in Q3 2020, and up from the pre-COVID historical average of 44.5%.

– For the 12-month September 2021 period, buybacks were $742.2 billion, a 21.8% increase from $609.4 billion in the 12-month June 2021 period, and up 30.0% from $570.8 billion in the 12-month September 2020 period.

The article also expects robust buyback activity among the S&P 500 to continue during the 4th quarter, as company use repurchases to fund equity comp plan obligations.

John Jenkins