Q2 2022 Stock Buybacks: Trend Report

Analysis from VerityData examining Q2 2022 corporate share buyback trends at U.S. companies.

Ali Ragih, Research Analyst
September 13, 2022

In this article, featuring highlights of a Buyback Trends report from VerityData | InsiderScore, we examine quarterly buyback data and identify market, index, and sector trends related to corporate stock repurchases. Note: This article is an excerpt of an exclusive report for VerityData | InsiderScore customers.

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Q2 2022 Stock Buybacks: Macro Trends

Market volatility offered buyback opportunities and many companies took advantage of it. While the dollar value of buybacks fell quarter-over-quarter, more companies executed buybacks in Q2’22 than in any other quarter on record except Q1’20 (when the pandemic hit) and buybacks at Russell 2000 companies hit an all-time high.

Approximately 57% of the net decline in buyback volume came from the Financial sector, as several banks ceased buybacks early in the quarter to shore up capital reserves. Note that the major banks are largely methodical, not opportunistic, with buybacks due to Federal Reserve rules.

Source: VerityData | InsiderScore

Buyback participation in Q2’22 was near record level as plan utilization remained elevated. A total of 1,323 companies reported repurchases for Q2’22, 4% higher than the prior quarter. The breadth of buybacks has been continuously increasing for several quarters in row and is now elevated, reaching the highest level since Q1’20, when nearly 1,400 companies bought back stock. The percentage of companies with open buyback authorizations that repurchased shares was 58% in Q2’22, extending a multi-quarter rise. Meanwhile, a total of 197 companies initiated new buyback plans in Q2’22 and another 159 increased existing plans. The combined figure of 356 is a -12.7% change from the 408 in Q1’22.

U.S. buyback volume dropped -15% sequentially but increased 21% year-over-year in Q2’22. Buyback volume for U.S. companies in Q2’22 totaled $269.5B, representing a -14.9% sequential decrease from the record $316.9B in Q1’22. Despite the QoQ drop, the dollar value of buybacks was up 20.6% from a year earlier. Buyback volume reached new all-time highs in each quarter from Q3’21 through Q1’22 and the Q2’22 figure is slightly above the Q3’21 figure.

Reduction in S&P 500 buybacks drag down total; Russell 2000 buybacks hit all-time high. The S&P 500 aggregate buyback value declined -18.6% from the prior quarter and remained up 12.0% year-over-year. The $216.75B in S&P 500 repurchases accounted for 80.4% of all buybacks, lower than the average of 89%. Volume for the Russel 2000 broke a new record with volume at $18.6B, beating out the prior high of $18.0B set in Q4’21.

Small-cap companies have done a better job historically of accelerating buybacks into weakness, as compared to large-cap companies.

 

Source: VerityData | InsiderScore

Buyback tax of 1% will likely have little impacts on aggregate volume. The Inflation Reduction Act that was signed into law on August 16 includes a 1% excise tax on buybacks beginning 2023. At 1%, the willingness and calculation of whether to buy back shares will only change minimally. Some companies may try to save 1% and front-load buybacks into 2H’22 instead of Q1’23, so volume may pick up slightly. See our recent Insights piece on the subject.

Q2 2022 Stock Buyback Trends By Index & Sector

Index/Sector Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 QoQ Change YoY Change
All U.S. Companies $223.6 $262.7 $301.0 $316.9 $269.5 -14.9% 20.6%
S&P 500 $193.5 $223.8 $252.0 $266.1 $216.7 -18.6% 12.0%
Russell 2000 $10.1 $13.4 $18.0 $16.5 $18.6 13.0% 85.4%
Technology $85.3 $96.0 $103.0 $100.9 $93.9 -6.9% 10.1%
Consumer Discretionary $29.6 $32.4 $50.9 $49.0 $42.2 -14.0% 42.6%
Financial $53.1 $71.3 $62.9 $61.2 $34.5 -43.6% -35.1%
Industrial Goods $16.8 $19.9 $21.8 $28.0 $25.7 -8.3% 52.6%
Energy $3.2 $4.9 $10.1 $11.7 $23.1 97.5% 613.5%
Healthcare $18.4 $16.2 $21.3 $37.5 $21.1 -43.7% 14.4%
Materials $5.5 $7.3 $11.4 $9.5 $12.7 34.3% 131.5%
Consumer Staples $10.4 $11.2 $15.3 $14.4 $10.6 -26.1% 1.7%
Real Estate $1.0 $1.9 $2.2 $2.3 $4.0 72.5% 282.3%
Utilities $0.0 $0.3 $1.6 $1.5 $0.9 -39.0% 4985.9%
Telecommunication $0.1 $1.1 $0.6 $0.9 $0.9 -8.4% 545.2%

Source: VerityData | InsiderScore

Leading Repurchasers for Q2 2022

The leading repurchases in Q2’22 were Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Meta Platforms (FB) and Cigna (CI). S&P 500 companies that executed the largest buybacks as a percent of outstanding were MGM Resorts (MGM), KLA Corp (KLAC), Marathon Petroleum (MPC), Eastman Chemical (EMN) and CI.

  • Apple (AAPL) topped all companies market-wide, as usual, with $21.7B in buybacks in Q2’22, representing 0.9% of its outstanding. The amount is down from the prior quarter’s $22.9B and compares to a record of $24.0B.
  • Alphabet (GOOGL) repurchased $15.2B to set a record for the firm. The amount is up from the prior two quarters of ~$13.4B which were the previous highest quarters for GOOGL.
  • Microsoft (MSFT) had the third highest buyback market-wide at $7.8B, matching the prior quarter. The buybacks are the highest ever for dollar value for MSFT. Even still, the buyback represented just 0.4% of the outstanding shares. Despite the high dollar value, MSFT repurchases have become immaterial.
  • Meta Platforms (FB) repurchased $5.1B in Q2’22, the second quarter in a row of significant declining volume after spending $19.2B in Q4’21. The reduction in spend came with shares falling to their lowest level in two years.
  • CIGNA (CI) accelerated its quarterly buyback to $4.5B Q1’22, equal to 5.7% of the outstanding. The dollar value was the largest ever for CI and was the largest since 2006 as a percent of the outstanding.

About the Data

InsiderScore tracks all open buyback plans that are publicly disclosed by U.S.-listed companies. Quarterly buyback updates are typically included in 10-Qs and 10-Ks, and we capture buying that is part of the publicly announced plan.

Data includes accelerated share repurchases (“ASRs”) and tender offers. Buybacks for the purpose of M&A (exchange offers and tender offers specifically to acquire a company) are excluded. For companies that do not report on a normal calendar basis, we’ve done our best to estimate the most appropriate corresponding calendar period.

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