The Biggest Buybacks: Did They Work?
Stock buyback authorizations reached $453 billion so far this year, a 49 percent increase from the same period in 2010, according to a research note by Birinyi Associates.
In October alone, there were 126 new announcements bringing the total to 940 year-to-date. If stock buyback programs continue at the same rate, Birinyi Associates projects the figure may reach $540 billion, the third largest amount of all-time.
When cash-rich companies decide to repurchase their own shares, investors tend to see the move as a sign of confidence, with an underlying message that a firm's stock may be "undervalued," prompting management to invest in their own stock.
Similarly, repurchase programs could be perceived as an effort to reduce the supply of a company's stock, therefore boosting earnings per share.
Investors also tend to be wary when corporations finance such transactions with debt, and although corporations may approve a certain figure over a specific period of time, the company is not required to buy back the entire amount.
With that mind, 65 companies in the S&P 500 announced share buyback programs greater than $1 billion so far this year. Here is a look at the 15 largest announcements and how their shares performed since then.