Q3 2022 Stock Buybacks: Trend Report

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

Ali Ragih, CFA, Senior Research Analyst
December 21, 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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Q3 2022 Stock Buybacks: Macro Trends

Buyback volume, number of companies decreases in Q3’22 despite market weakness. Fewer companies took advantage of market volatility in Q3’22 as compared to Q2’22. It’s the second quarter in a row of declining volume too. Stocks were volatile during the quarter when considering the August rally and September pullback.

Regardless, companies had the opportunity to aggressively take advantage of weak prices, but few did. Historically companies have been good at accelerating buybacks during small dips but decrease buyback volume during deeper pullbacks when the market outlook is murky and cash conservation is needed. That again appears to be the case as 2022 comes to a close.

Source: VerityData | InsiderScore

Buyback participation in Q3’22 remained elevated at nearly 1,200. A total of 1,192 companies reported repurchases for Q3’22, -10.9% lower than the prior quarter. The breadth of buybacks had been continuously increasing for several quarters in row up until Q3’22.

Despite the sequential reduction, participation of 1,192 continues to be elevated against a 10-year average of 1,015. The percentage of companies with open buyback authorizations that repurchased shares was 52% in Q3’22, reversing a multi-quarter rise.

New and increased buyback plans drop to -16.5% to 379. A total of 219 companies initiated new buyback plans in Q3’22 and another 160 increased existing plans. The combined figure of 379 is a -16.5% change from the 454 in Q2’22.

U.S. buyback volume dropped -12% sequentially Q3’22. Buyback volume for U.S. companies in Q3’22 totaled $241.4B, representing a -11.6% sequential decrease from the prior quarter and a -8.1% YoY drop. It’s the second quarter in a row of declining market-wide buyback volume after a record was reached in Q1’22 that saw a total of $316.8B in buybacks.

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 Q4’22 instead of Q1’23. However, if Q3’22 is any indication, companies are not finding 1% a meaningful difference to time-out buybacks against the upcoming tax.

Q3 2022 Stock Buyback Trends By Index & Sector

Q3 ‘21 Q4 ‘21 Q1 ‘22 Q2 ‘22 Q3 ‘22 QoQ Change YoY Change
All U.S. Companies $262.7 $301.0 $316.8 $272.9 $241.4 -11.6% -8.1%
S&P 500 $223.7 $251.8 $266.1 $219.4 $199.5 -9.1% -10.8%
Russell 2000 $13.2 $18.0 $16.5 $18.8 $11.5 -38.7% -12.9%
 Technology $96.0 $103.0 $100.9 $95.2 $83.4 -12.4% -13.1%
 Consumer Discretionary $32.4 $50.9 $49.1 $43.4 $36.3 -16.4% 11.9%
 Financial $71.3 $62.9 $61.2 $34.5 $30.1 -12.6% -57.7%
 Energy $4.9 $10.1 $11.6 $22.9 $27.9 22.0% 469.9%
 Industrial Goods $19.9 $21.8 $28.0 $25.7 $22.6 -12.2% 13.4%
 Healthcare $16.2 $21.3 $37.5 $21.1 $17.2 -18.5% 5.8%
 Consumer Staples $11.2 $15.3 $14.4 $11.7 $11.5 -1.4% 2.8%
 Materials $7.3 $11.4 $9.5 $12.7 $8.9 -29.9% 21.8%
 Real Estate $1.9 $2.2 $2.3 $4.0 $2.1 -47.4% 7.3%
 Telecommunication $1.1 $0.6 $0.9 $0.9 $0.8 -6.6% -28.2%
 Utilities $0.3 $1.6 $1.5 $0.9 $0.5 -42.5% 55.1%

Source: VerityData | InsiderScore

Leading Repurchasers for Q3 2022

The leading repurchases in Q3’22 were Apple (AAPL), Alphabet (GOOGL), Meta Platforms (FB), Microsoft (MSFT) and Exxon Mobil (XOM).

Apple (AAPL) topped all companies market-wide, as usual, with $25.2B in buybacks in Q3’22, breaking the previous record of $24.0B from Q4’20. The latest quarter equals 1.0% of its outstanding.

Alphabet (GOOGL) repurchased $15.4B in Q3’22 to set another record for the firm. The amount is up from the prior quarter of $15.2B which were the previous highest record for GOOGL.

Meta Platforms (FB) repurchased $6.4B in Q3’22, reversing a trend of decreasing buybacks in the prior two quarters. The latest quarter compares to a peak of $19.2B in Q4’21.

Microsoft (MSFT) had the fourth largest buyback market-wide at $4.6B, despite the solid drop compared to the previous two quarters of $7.8B. The buybacks are the highest ever for dollar value for MSFT. The multi-billion dollar buyback did little against the share count as it represented 0.2% of the outstanding.

Exxon Mobil (XOM) cracked the top five by repurchasing $4.5B in shares. The amount slightly surpasses the $4.0B bought back in Q2’22 and is the highest since 2013.

[Watch] How to Get Compelling Investment Ideas From Buyback Data

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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