Long subject to criticism, stock buybacks came under attack once again when the new Inflation Reduction Act of 2022 imposed a 1% excise tax on stock repurchases for publicly traded companies. While it is only a 1% tax and unlikely to change behavior of companies in any significant way, I am concerned that we are heading down a slippery slope with ad hoc taxes. This decision did not take the wind out of the sails of buyback announcements.
A total of 23 companies announced buybacks this week. The two companies that managed to make it to the top of our list are H&R Block, Inc. (HRB) and EuroDry Ltd (EDRY) announcing a $1.25 billion and a 10 million stock buyback respectively, representing around 20% and 19% of their market caps at announcement. Moderna (MRNA) announced its second $3 billion buyback this year. It is fascinating to see how the two biggest beneficiaries of COVID-19 vaccines, Moderna and Pfizer, have take completely different approaches to capital allocation. While Moderna is going the buyback route, Pfizer (PFE) has been using the cash bonanza to scoop up several companies to strengthen its pipeline.