Goldman projects buybacks for S&P 500 companies to total $940 billion, a 13% increase over the previous year and a new high for a number that has continued to increase through much of the post-financial crisis period. Total buyback executions among all companies this year were up 26% through mid-July.
The rise in buybacks has had a twin effect on corporate balance sheets, both drawing down cash and increasing leverage. It also represents a more-of-the-same trend that has come despite the $1.5 trillion tax cut passed in late 2017. The record cut had spurred hopes that companies would eschew the buyback formula that has helped generateand instead lead to more investment in equipment and personnel.
Over the past 12 months, non-financial companies have drained $272 billion in cash as part of the push to return still more money to shareholders. That represents a 15% decline and is the steepest drop since at least 1980, Kostin said.
Public Corporations can be expected to exploit the time-value of money. It is their job to serve the shareholders. If the intrinsic growth of the stock exceeds the cost of debt - it is a good investment....so long as that relationship holds.
I wish I could pull out debt to pay all my bills so I don't have to work.
There is a bank somewhere clearing all this....we need to find out who that bank is
Gotta make those share options worth something!
Did someone say RampCapitalLLC
Buy baby buy!!
Innovation !
Is there evidence that those buying back are the same as the one’s that are increasing gross debt? Not my experience JeffCoxCNBCcom
Looks like a sound plan. Let's lower rates so they can get more, right?
They call it 'returning cash to investors', but the investors don't get any cash at all. They just get a better mark on their stock. A mark that could well prove temporary.
I have a theory that $1 trillion per year in stock buybacks has a large deflationary impact to the broader economy.
Say anything about buybacks and FinBros explode into a rage. There’s an obvious tax incentive (*cough* mOnEy lAuNdErInG *cough*) and it improves P/E ratio. Now with ZIRP/NIRP the Ponzi grows bigger. Inequality not seen since Great Depression which was caused by a credit expansion
EddyElfenbein Am I reading this right ? Borrowing costs are zilch but the debt still comes due. Whipsaw if the market sells off substantially
This is so bad. 😤
If the FED insists in low interest rates we might as well take advantage.
Companies have realized that most investors still use PE ratios even when heavily capitalized with debt rather than just equity. Investors will learn the hard way.
Nothing can go wrong as long as they never hike rates again.
Not $ba anymore tho
Pump that ROE boys
Buybacks are fine... but paid with debt? I guess it all boils down to wacc, but in principle it sounds dangerous when done in excess.
Buy backs at the height of the markets🤔!
buy the bitcoins
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