3 ms·

Oracle and Apple are exceptions than norm. Many companies have shown growth on back of the low interest rate environment. For them to spend money for dividends

Oracle and Apple are exceptions than norm. Many companies have shown growth on back of the low interest rate environment. For them to spend money for dividends and buybacks in excess of earnings is not good. Buybacks are especially concerning if they happen at well above company's fair value. That is actually throwing good money to buy an expensive company.

nostrademons 7y ago
That's who we're talking about in this thread, though. vonmoltke posted the actual list of companies doing buybacks. Apple is #1 and Oracle is #2; the remainder of the top 5 is rounded out by Wells Fargo ($253B in cash, albeit as a bank), Microsoft ($133B in cash and short-term investments), and Cisco ($46B in cash and short-term investments). Together they're responsible for over 20% of the $800B in 2018 share buybacks. The top 20 is responsible for about 45% and includes companies like JP Morgan, Bank of America, Facebook, Alphabet, Starbucks, Pfizer, Citigroup, etc. Arguably they're buying back stock now because they believe it's undervalued. The other prevailing narrative in the media today is that corporations are too powerful and are bleeding the American consumer & worker dry. Which is it? If they're actually bleeding the American consumer dry you'd have to be an idiot not to want a piece of the action, while if they're overvalued and about to collapse there's no reason to be afraid of them.
- dwaltrip 7y ago
  To determine "who is doing buybacks", don't we need to normalize by market cap, annual revenue or profit, or some similar metric? Apple having the largest buyback amount doesn't seem to tell us a ton by itself, given that they are among the top few most valuable companies in the world.
  - nostrademons 7y ago
    Depends on the conclusion you're trying to draw from the data. The headline is "Dividends and buybacks now larger than the total reported earnings of the S&P 500." For that conclusion, it's absolutely relevant that Apple et al are doing the buybacks and that their market cap dwarfs many of the companies on the S&P 500 (which has a threshold of $6B to enter, vs. close to $1T for Apple). Apple deciding that they're going to return some of the cash to shareholders they've been stockpiling for the last 5ish years would dwarf the entire earnings of most of the bottom 200 stocks in the S&P 500. That's not a report on weakness or danger in the market, it's a report of what a small number of companies are doing with a large cash hoard. It's sorta like reporting that "Residents of Medina, WA lost more money to divorce in 2019 than they made in total wages" without reporting that Jeff Bezos is a resident.
    - dwaltrip 7y ago
      Ah ok, I see what you mean. Thanks.

nostrademons 7y ago

That's who we're talking about in this thread, though. vonmoltke posted the actual list of companies doing buybacks. Apple is #1 and Oracle is #2; the remainder of the top 5 is rounded out by Wells Fargo ($253B in cash, albeit as a bank), Microsoft ($133B in cash and short-term investments), and Cisco ($46B in cash and short-term investments). Together they're responsible for over 20% of the $800B in 2018 share buybacks. The top 20 is responsible for about 45% and includes companies like JP Morgan, Bank of America, Facebook, Alphabet, Starbucks, Pfizer, Citigroup, etc. Arguably they're buying back stock now because they believe it's undervalued. The other prevailing narrative in the media today is that corporations are too powerful and are bleeding the American consumer & worker dry. Which is it? If they're actually bleeding the American consumer dry you'd have to be an idiot not to want a piece of the action, while if they're overvalued and about to collapse there's no reason to be afraid of them.

dwaltrip 7y ago
To determine "who is doing buybacks", don't we need to normalize by market cap, annual revenue or profit, or some similar metric? Apple having the largest buyback amount doesn't seem to tell us a ton by itself, given that they are among the top few most valuable companies in the world.
- nostrademons 7y ago
  Depends on the conclusion you're trying to draw from the data. The headline is "Dividends and buybacks now larger than the total reported earnings of the S&P 500." For that conclusion, it's absolutely relevant that Apple et al are doing the buybacks and that their market cap dwarfs many of the companies on the S&P 500 (which has a threshold of $6B to enter, vs. close to $1T for Apple). Apple deciding that they're going to return some of the cash to shareholders they've been stockpiling for the last 5ish years would dwarf the entire earnings of most of the bottom 200 stocks in the S&P 500. That's not a report on weakness or danger in the market, it's a report of what a small number of companies are doing with a large cash hoard. It's sorta like reporting that "Residents of Medina, WA lost more money to divorce in 2019 than they made in total wages" without reporting that Jeff Bezos is a resident.
  - dwaltrip 7y ago
    Ah ok, I see what you mean. Thanks.