Investing And Buybacks -- January 8, 2023

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Warren Buffett: likes buybacks. Motley Fool.

• Since taking over as Berkshire Hathaway CEO in the mid-1960s, Buffett has outperformed the total return of the S&P 500 by a factor of 120. 
• Over the past six years, Buffett's company has purchased a combined $54 billion worth of Apple and Chevron shares. 
• However, the Oracle of Omaha has overseen more than $63 billion in purchases of another stock since mid-2018: his own company -- BRK-A.
  

Apple still at the top when it comes to buybacks, IBD.

Apple and Google parent-Alphabet led all U.S. companies in stock buybacks during the second quarter, though overall repurchases fell nearly 22% from the previous quarter.

Meanwhile, Microsoft and Facebook-parent Meta also placed among the top five in stock buybacks.

Overall, S&P 500 buybacks in second quarter were $219.6 billion, down 21.8% from the first quarter's record $281 billion.

One analyst] said some companies may be slowing buybacks to protect dividends.

He added: "The participation decline appears to be over economic concern — specifically forward profits." Information technology companies continued to lead the way in buybacks. Buybacks by financial companies fell 61% to $21.2 billion. Health Care buybacks decreased 58% to $17.2 billion. 

Elite legislators hate stock buybacks. Link here. They had proposed a 2%; compromise settled at 1%

Major corporations are scrambling to repurchase their own shares before a new tax on stock buybacks passed as part of Democrats’ major spending bill over the summer goes into effect, an effort that may sap one of the bill’s main sources of revenue.

Buybacks were illegal until 1982 and have long been blasted by critics as a legal form of market manipulation and a way for executives to pay themselves more.

“I hate stock buybacks,” Senate Majority Leader Charles Schumer (D-N.Y.) said in August upon striking a deal with Sen. Joe Manchin (D-W Va.) that would become the Inflation Reduction Act (IRA).

The IRA, signed into law by President Biden, enacted the 1-percent buyback tax after an initial proposal to tax the personal income of hedge fund managers was blocked by Sen. Kyrsten Sinema (D-Ariz.).

“I think [buybacks] are one of the most self-serving things that corporate America does,” Schumer said. “Instead of investing in workers and in training and in research and in equipment, they simply – they don’t do a thing to make their company better, and they artificially raise the stock price by just reducing the number of shares. They’re despicable. I’d like to abolish them.”

[Similar to releasing oil from the SPR to affect oil prices ahead of a national election. But let's not go there.]

Major U.S. corporations, including T-Mobile US Inc., Johnson & Johnson and Comcast announced new buyback initiatives in September ahead of the December 31, 2022, effective date of the IRA’s new tax.

T-Mobile’s board authorized a repurchase program for $14 billion of the company’s common stock on Sept. 8 that would extend through 2023.  

Comcast also announced in mid-September that its board “increased its share repurchase program authorization to a total of $20.0 billion, effective as of September 13, 2022.” 

Johnson & Johnson announced its own $5 billion stock buyback initiative in September.

Much more at the link.