Buyback Wednesdays – Companies Repurchasing Shares Turn in a Dismal 2022

Welcome to edition 40 of Buyback Wednesdays, a weekly series that tracks the top stock buyback announcements during the prior week.

Considering we had very few buyback announcements last week, we decided to take a big picture look at the performance of companies buying back their stock. We decided to look at the biggest buyback announcements of 2022 and the biggest cannibals of the year to see how they performed. Often the two are not the same and the companies announcing the largest buybacks are not the ones buying back the most in the same year. In fact not a single company made it into both lists and each list had its unique set of companies.

The performance of both groups (announcers and actual buyers) was dismal for 2022 and they underperformed the S&P 500’s 20% drop in 2022 by a wide margin. We discuss each group in more detail below.

This article is a continuation of our November 30, 2022 article titled Buyback Wednesdays – Over $1 Trillion in Buybacks Announced This Year, where we looked at the number of announcements over the last few years, and the largest actual repurchases of 2022.

Buybacks have become the dominant form of returning cash to shareholders in recent years and so we decided to take a closer look at what the academic and industry research tells us about this capital allocation strategy. The research we have outlined below is a mixed bag and the last paper is particularly noteworthy given its criticism of share repurchases.

Only plus or premium subscribers can access this post. Subscribe today.