In this article, we discuss the 10 companies that announced huge share buybacks recently.
During a recession, companies may experience a decline in their stock prices due to economic uncertainties and market volatility. By engaging in share buybacks, companies can repurchase their own shares from the market, reducing the total number of outstanding shares. This reduction in supply can help support and stabilize the stock price, instilling confidence among investors and signaling that the company believes in its own long-term prospects. These buybacks provide an efficient way for companies to utilize their excess cash. Instead of hoarding cash reserves or making large capital expenditures during an economic downturn, companies can use their funds to repurchase shares. This action can enhance shareholder value by increasing earnings per share (EPS) and improving financial metrics such as return on equity (ROE).
Furthermore, buybacks can be seen as a signal of financial strength and stability. Companies that have sufficient cash reserves to repurchase shares in a recession demonstrate their ability to weather economic downturns and generate future profits. This can attract investors and contribute to a positive perception of the company’s financial health. Additionally, share buybacks can provide a tax-efficient way to distribute excess cash to shareholders. By repurchasing shares, companies can return value to shareholders without incurring the same tax liabilities as dividends. This can be particularly advantageous for investors in higher tax brackets. Buyback activity in the second quarter of 2022 in US was close to a record level as companies continued to utilize their buyback plans.
A total of 1,323 companies reported repurchases, a 4% increase from the previous quarter. The breadth of buybacks has been consistently expanding for multiple quarters, reaching its highest level since the first quarter of 2020 when nearly 1,400 companies engaged in buybacks. In the second quarter of 2022, 58% of companies with open buyback authorizations repurchased shares, marking a continued upward trend. Additionally, 197 companies initiated new buyback plans, and 159 companies increased existing plans, resulting in a combined figure of 356, representing a downturn of 12.7% from the first quarter of 2022. In terms of volume, buybacks by US companies experienced a sequential decrease of 15% in the second quarter of 2022, but still saw a year-over-year increase of 21%.
The total buyback volume for US companies in Q2’22 amounted to $269.5 billion, which was a 14.9% decrease from the record-setting $316.9 billion in the first quarter of 2022. Despite the quarter-on-quarter drop, the dollar value of buybacks showed a significant increase of 20.6% compared to the same period in the previous year. Buyback volume reached new all-time highs in each quarter from the third quarter of 2021 through the first quarter of 2022, and the second quarter of 2022 figure slightly exceeded the third quarter of 2021 figure. However, it is worth noting that share buybacks can also be a subject of debate. Critics argue that companies should prioritize investments in research and development, employee wages, or capital expenditures instead of repurchasing shares.
They claim that buybacks can artificially inflate stock prices and benefit shareholders, including executives with stock-based compensation, at the expense of long-term growth and job creation. Share buybacks have been a prevalent trend in the United States over the past few decades. Companies use share buybacks as a strategy to return capital to shareholders and manage their capital structure. The trend gained significant momentum after the implementation of the Tax Reform Act of 1986, which imposed restrictions on dividend tax treatment but allowed for more favorable tax treatment of capital gains from stock sales. Another factor was the availability of low-cost debt due to historically low interest rates. Companies took advantage of this opportunity to borrow funds and finance their share buyback programs.
This approach became especially popular among large corporations, which had access to more favorable lending terms and greater financial resources. In recent years, share buybacks have attracted public and political scrutiny. Critics argue that buybacks primarily benefit shareholders, including top executives with stock-based compensation, rather than investing in long-term growth, increasing employee wages, or other capital expenditures. This debate has led to calls for stricter regulations on buybacks or alternative uses of corporate funds. Despite the criticism, share buybacks remain a significant feature of the US corporate landscape. Many companies continue to use buybacks as a means to enhance shareholder value, manage their capital structure, and signal confidence in their future prospects.
The COVID-19 pandemic and associated economic uncertainties have impacted buyback activity, with some companies suspending or reducing their programs to conserve cash. However, as economic conditions stabilize, it is expected that share buybacks will resume their role as a key tool in capital allocation for US companies. Some of the stocks to monitor in this context include Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG).
Speedcurve Performance Analytics
Our Methodology
For this article, we selected stocks that have announced share buybacks this year and ranked them based on overall hedge fund sentiment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Companies That Announced Huge Share Buybacks Recently
10. ArcelorMittal (NYSE:MT)
Number of Hedge Fund Holders: 19
ArcelorMittal (NYSE:MT) operates as integrated steel and mining companies in the Americas, Europe, Asia, and Africa. On May 5, the company announced that it would be commencing a new share buyback program of up to 85 million shares. The program will be completed within two years, per the firm. The firm also said that the amount of shares repurchased through this program will depend on the level of post-dividend free cash flow generated over the period.
In late March, investment advisory Morgan Stanley maintained an Overweight rating on ArcelorMittal (NYSE:MT) stock and lowered the price target to EUR 37.5 from EUR 38. Analyst Alain Gabriel issued the ratings update.
At the end of the first quarter of 2023, 19 hedge funds in the database of Insider Monkey held stakes worth $492 million in ArcelorMittal (NYSE:MT), up from 13 in the preceding quarter worth $580 million.
Just like Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG), ArcelorMittal (NYSE:MT) is one of the stocks trending on the up after announcing share buybacks.
9. Golar LNG Limited (NASDAQ:GLNG)
Number of Hedge Fund Holders: 33
Golar LNG Limited (NASDAQ:GLNG) is an LNG transportation firm. On May 23, Golar LNG announced a share buyback program worth up to $150 million. Additionally, the company also reinstated a quarterly dividend of $0.25 per share, ensuring regular income for shareholders. The last quarterly dividend of the firm was $0.15 per share and was declared in May 2019. For the first quarter of 2023, the company posted a revenue of nearly $74 million, up more than 1% compared to the revenue over the same period last year.
On April 24, investment advisory Stifel maintained a Buy rating on Golar LNG Limited (NASDAQ:GLNG) stock and lowered the price target to $34 from $35, noting the adjustment reflected estimates for companies with LNG price exposure.
At the end of the first quarter of 2023, 33 hedge funds in the database of Insider Monkey held stakes worth $607 million in Golar LNG Limited (NASDAQ:GLNG), compared to 38 the preceding quarter worth $774 million.
In its Q2 2022 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Golar LNG Limited (NASDAQ:GLNG) was one of them. Here is what the fund said:
“This quarter we sold our entire stake in Golar LNG Limited (NASDAQ:GLNG). As we highlighted in our previous letter, the company engaged in the conversion of natural gas into liquefied natural gas (FLNG infrastructures), the storage of LNG and regasification through FSRU and the transportation of LNG (with its stake in Cool Company), has benefited greatly from the current tightness in the natural gas market, derived from the energy transition and, indeed, aggravated by the Russian invasion of Ukraine and the various sanctions and measures taken by the Western nations against the country led by Vladimir Putin. On the one hand, its market value relative to our intrinsic value estimate has considerably narrowed following its outstanding performance. On the other hand, our search for a more favorable riskreturn setup in the natural gas market led us to sell Golar LNG and to invest, as we will discuss below, in its spin-off Cool Company.”
8. Align Technology, Inc. (NASDAQ:ALGN)
Number of Hedge Fund Holders: 39
Align Technology, Inc. (NASDAQ:ALGN) designs, manufactures, and markets Invisalign clear aligners, and iTero intraoral scanners and services for orthodontists and general practitioner dentists. In February, the firm announced a new accelerated share buyback agreement with Citibank to repurchase $250 million of the company’s common stock. The deal is in line with Align’s $1 billion stock repurchase program announced back in 2021.
On April 27, investment bank Piper Sandler maintained an Overweight rating on Align Technology, Inc. (NASDAQ:ALGN) stock and raised the price target to $370 from $360, appreciating the near-term revenue and earnings trajectory of the firm.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Align Technology, Inc. (NASDAQ:ALGN) with 1.3 million shares worth more than $451 million.
7. United Parcel Service, Inc. (NYSE:UPS)
Number of Hedge Fund Holders: 39
United Parcel Service, Inc. (NYSE:UPS) provides letter and package delivery, transportation, logistics, and related services. Earlier this year, the company announced that it had authorized a $5 billion share buyback plan to enhance growth prospects. The new program replaced existing share buyback authorizations. In addition to share buybacks that boost investor confidence, the firm also pays a handsome dividend to shareholders. On May 3, the firm announced a quarterly dividend of $1.62 per share, in line with previous. The forward yield was 3.69%.
On June 2, investment advisory Barclays maintained an Equal Weight rating on United Parcel Service, Inc. (NYSE:UPS) stock and lowered the price target to $172 from $180, noting that near-term UPS headwinds hinge on the outcome of Teamster labor negotiations.
At the end of the first quarter of 2023, 39 hedge funds in the database of Insider Monkey held stakes worth $476 million in United Parcel Service, Inc. (NYSE:UPS), compared to 36 in the previous quarter worth $514 million.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and United Parcel Service, Inc. (NYSE:UPS) was one of them. Here is what the fund said:
“United Parcel Service, Inc. (NYSE:UPS) has been a beneficiary of the pandemic-related shift to e-commerce. Revenues increased 15% in the year, with strong leverage in the business boosting operating profit by al- most 67%. Management is focusing on a ‘Better not Bigger’ strategy for the business and divested the UPS Freight business early in the year. Mean- while, the company is expected to increase distributions to shareholders in 2022, from both dividends and share buybacks.”
6. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders: 41
Shell plc (NYSE:SHEL) is an energy and petrochemical firm. On May 4, Shell announced plans to buy back an additional $4 billion worth of shares as its profits exceeded estimates. The decision to repurchase shares comes as Shell seeks to distribute excess cash to shareholders and drive up returns. In the previous quarter, the firm had recorded $4 billion in share buybacks as well. The company posted a revenue of more than $86 billion in the first quarter of 2023, up over 3% compared to the revenue over the same period last year.
On May 18, Piper Sandler analyst Ryan Todd maintained an Overweight rating on Shell plc (NYSE:SHEL) stock and lowered the price target to $75 from $77, noting that energy stocks continue to struggle to regain traction coming out of Q1 earnings season.
At the end of the first quarter of 2023, 41 hedge funds in the database of Insider Monkey held stakes worth $2.7 billion in Shell plc (NYSE:SHEL), compared to 40 in the previous quarter worth $3 billion.
Alongside Apple Inc. (NASDAQ:AAPL), Meta Platforms, Inc. (NASDAQ:META), and Alphabet Inc. (NASDAQ:GOOG), Shell plc (NYSE:SHEL) is one of the stocks trending on the up after announcing share buybacks.
In its Q4 2022 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Shell plc (NYSE:SHEL) was one of them. Here is what the fund said:
“We scaled back our weighting in clean energy this quarter, which is a part of the portfolio’s environment theme, to take profits after a successful run in 2022. We did so by trimming our position in Shell plc (NYSE:SHEL), a stock we added to the portfolio in Q1 2022. As an integrated energy company, approximately one third of Shell’s revenues come from transition fuels, such as LNG, and another third comes from new energy sources such as green hydrogen. LNG is one of the cleanest fossil fuels and represents a potential bridge to the future by replacing higher carbon energy sources with lower carbon ones while renewable technologies mature. As the largest LNG supplier in the world, we believe Shell is particularly well-positioned to help Europe meet its energy needs as it looks for ways to replace imported Russian oil and gas with new sources after the embargo.”
5. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 64
Chevron Corporation (NYSE:CVX) is an integrated oil and gas firm. In January this year, Chevron Corporation announced the authorization of a $75 billion stock buyback program, reflecting the confidence in the financial position and commitment to returning value to shareholders. The company also recently announced plans to drill in the gas-rich sites of African nation Algeria. The firm had previously announced plans to sell energy assets in Congo for nearly $1.5 billion.
On June 1, investment advisory RBC Capital upgraded Chevron Corporation (NYSE:CVX) stock to Outperform from Sector Perform and raised the price target to $180 from $165, noting the firm had effectively used its premium multiple to acquire companies in recent years.
At the end of the first quarter of 2023, 64 hedge funds in the database of Insider Monkey held stakes worth $23 billion in Chevron Corporation (NYSE:CVX), up from 57 in the preceding quarter worth $32 billion.
In its Q4 2022 investor letter, Carillon Tower Advisers highlighted a few stocks and Chevron Corporation (NYSE:CVX) was one of them. Here is what the fund said:
“Energy performed well during the fourth quarter, with the sector up about 23%. Investors returned to the sector after the Organization of the Petroleum Exporting Countries (OPEC) signaled it would reduce production. Chevron Corporation (NYSE:CVX) reported strong quarterly results while buying back stock, paying a healthy dividend, and maintaining a strong balance sheet.”
4. ServiceNow, Inc. (NYSE:NOW)
Number of Hedge Fund Holders: 96
ServiceNow, Inc. (NYSE:NOW) provides enterprise cloud computing solutions that define, structure, consolidate, manage, and automate services for enterprises worldwide. On May 17, the shares of the firm soared after it announced on investor day that it would launch its first-ever share buyback program worth $1.5 billion. The firm made the decision on the back of a hike to operating margin guidance in 2024 and the prospects in artificial intelligence.
On May 30, Bernstein analyst Peter Weed maintained an Overweight rating on ServiceNow, Inc. (NYSE:NOW) stock and raised the price target to $665 from $586, noting the firm was a huge $7 billion revenue business with very high penetration of the F500, G2000, and beyond.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in ServiceNow, Inc. (NYSE:NOW) with 808,897 shares worth more than $375 million.
In its Q2 2022 investor letter, Ensemble Capital, an asset management firm, highlighted a few stocks and ServiceNow, Inc. (NYSE:NOW) was one of them. Here is what the fund said:
“ServiceNow, Inc. (NYSE:NOW) is an enterprise software company that helps its corporate customers integrate all of their various software products into a unified platform. Their products are a key element in driving the digital transformation nearly every large company is undergoing. At the recent JP Morgan investor day, CEO Jamie Dimon explained that while the company could reduce expenses if needed should the economy slow, their spending on digital transformation would continue as this spending was critical to the company managing costs and maximizing revenue over time. As an example of this type of spending, Dimon specifically pointed to ServiceNow, calling out that the company’s products now oversaw the single largest collection of JP Morgan data and highlighted that working with them had saved JP Morgan $50 million over the past few years. (click here to read more…)
3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. In early May, the company announced plans for a new $90 billion share buyback program. The announcement was made while the firm posted earnings for the second fiscal quarter, reporting earnings per share of $1.52, beating estimates by $0.09. The revenue over the period was more than $94 billion, beating expectations by $2 billion.
On June 2, Morgan Stanley analyst Erik Woodring maintained an Overweight rating on Apple Inc. (NASDAQ:AAPL) stock and raised the price target to $190 from $185, noting that AR/VR could become the next $20 billion-plus standalone compute platform for Apple.
At the end of the first quarter of 2023, 131 hedge funds in the database of Insider Monkey held stakes worth $165 billion in Apple Inc. (NASDAQ:AAPL), compared to 135 in the previous quarter worth $136 billion.
In its Q2 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact production of apple products, however the manufacturing facilities have resumed activity.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Alphabet Inc. (NASDAQ:GOOG) provides various products and platforms such as Google Services, Google Cloud, and YouTube. In April, the company said it had authorized a $70 billion shares buyback program. In April 2022, the board of directors of the firm had approved a similar $70 billion share buyback program. In 2022, the firm was one of the top firms in terms of share buybacks, only beaten by tech rival Apple.
On April 23, investment advisory Jefferies maintained a Buy rating on Alphabet Inc. (NASDAQ:GOOG) stock and raised the price target to $150 from $130, noting that hyperscalers, data clouds and large differentiated platforms were best positioned to benefit from artificial intelligence.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel investment Group is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 24 million shares worth more than $2.5 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“Alphabet Inc. (NASDAQ:GOOG) is the parent company of Google, the world’s largest search and online advertising company. Shares of Alphabet declined 21.6% in the quarter due to concerns about slower global growth impacting the company’s core advertising business. We retain conviction in Alphabet’s merits as it continues to benefit from growth in mobile and online video advertising, which accrues to its core assets of search, YouTube, and the Google ad network. We are further encouraged by Alphabet’s investments in Cloud, AI, and Autonomous Driving (through its Waymo subsidiary).”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 220
Meta Platforms, Inc. (NASDAQ:META) is a tech firm that owns and runs social media platforms. In April, the parent company of Facebook reported lower fourth-quarter profit and revenue due to a downturn in online advertising and competition from platforms like TikTok. Despite this, the shares jumped as revenue surpassed expectations and a $40 billion stock buyback was announced.
On May 23, Piper Sandler analyst Thomas Champion maintained an Overweight rating on Meta Platforms, Inc. (NASDAQ:META) stock with a price target of $270, backing the firm to use AI to drive higher user engagement, develop better, more automated advertiser tools, and create an open-source AI ecosystem.
At the end of the first quarter of 2023, 220 hedge funds in the database of Insider Monkey held stakes worth $25 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 194 in the preceding quarter worth $15 billion.
In its Q1 2023 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:
“Our top contributors in Q1 were Meta Platforms, Inc. (NASDAQ:META), Warner Bros Discovery (WBD) and FedEx. Following sharp declines in 2022, shares of Meta Platforms have more than doubled since their early November 2022 lows. Last year’s drawdown created a highly favorable risk-reward, which we took advantage of by adding to our position. Management has wisely, in our view, recalibrated its spending plans to focus on profitability amid a weaker advertising environment, increased TikTok competition and Apple’s privacy changes. While investors got ahead of themselves back in 2021, extrapolating pandemic growth rates into the future, Meta is still a highly successful enterprise generating over $120 billion of revenue annually on a run-rate basis and has more than $40 billion in cash on its balance sheet to help it navigate its future course. Recent usage and engagement trends for Facebook and Instagram have been positive, and Reels—Meta’s answer to TikTok—is gaining traction.”
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Disclose. None. 10 Companies That Announced Huge Share Buybacks Recently is originally published on Insider Monkey.
