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Capital Markets

Stock Buybacks Surged in May

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June 05, 2018

Led by Apple’s $100bn splurge, buybacks make May 2018 biggest month ever

financial system softwareMay was a banner month for stock repurchases, driven in large part by one company: Apple. According to Birinyi Associates, there were 107 new repurchase authorizations made in May for a total of $176.8 billion. The firm said, “a significant portion” of May’s total value was Apple’s announcement of $100 billion in planned repurchases. “This announcement was the single largest share repurchase authorization ever,” Birinyi said in its June 4 bulletin.

May’s total repurchases is said to reflect the new tax law, said Birinyi, which included a reduced tax rate for cash repatriation. This is in accord with NeuGroup’s findings. According to NeuGroup’s Treasurers’ Group of Thirty Large Cap group, 54% of respondents plan on putting any repatriated cash toward stock repurchases. In fact, across NeuGroup’s universe of peer groups, including the Global Cash & Banking Group, the Treasury Investment Managers’ Group, Assistant Treasurers’ Peer Group and Asia Treasurers Peer Group, most had share repurchases as the top destination for repatriated cash.

According to reports, tech companies are leading the increase in share repurchases ($233 billion), with healthcare companies a distant second ($62 billion). Overall, according to CNBC, siting numbers from UBS, cash-rich companies are poised to spend $2.5 trillion on buybacks, dividends and M&A this year. This puts repurchases up 83 percent year to date, far outpacing the 9 percent gain in dividends. Not to be outdone, M&A activity involving US companies has also risen sharply, up 130%, according to UBS.

BuybacksSource: Birinyi Associates, May 2014

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