Red Flag of the Day: Declining Stock Buybacks (SPY)
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Stock buybacks in the S&P 500 (NYSE: SPY) decreased 3.8 percent to $84.3 billion during the first quarter of 2012. Although this information gives a somewhat lagging indicator, it is worth noting that this was the second quarterly decline after nine consecutive quarterly increases.
"Companies continued their pullback on share repurchases which started in the fourth quarter of 2011," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "While the average stock price was up 11.2% in the first quarter, companies spent 3.8% fewer dollars on buybacks, meaning the actual number of shares repurchased decreased more than the aggregate dollars spent would indicate."
For the second quarter of 2012, Silverblatt says: "Share count reduction, which was increasing for most of 2011, has declined with many companies holding back on aggressive buybacks. The flip side is that authorizations are still strong which, if market conditions cooperate, provides companies with the option to increase actual buying programs."
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"Companies continued their pullback on share repurchases which started in the fourth quarter of 2011," says Howard Silverblatt, Senior Index Analyst at S&P Indices. "While the average stock price was up 11.2% in the first quarter, companies spent 3.8% fewer dollars on buybacks, meaning the actual number of shares repurchased decreased more than the aggregate dollars spent would indicate."
For the second quarter of 2012, Silverblatt says: "Share count reduction, which was increasing for most of 2011, has declined with many companies holding back on aggressive buybacks. The flip side is that authorizations are still strong which, if market conditions cooperate, provides companies with the option to increase actual buying programs."
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