A Look at 2019 Buybacks Before Apple Earnings

Michael Schoonover, COO & Portfolio Manager
Michael Schoonover is Chief Operating Officer of Catalyst Capital Advisors LLC and Rational Advisors, Inc. and Portfolio Manager of a share buyback strategy fund at Catalyst Funds. He began his association with Catalyst in 2011 as a research consultant supporting the implementation and back testing of quantitative strategies. In March 2013, he became a senior analyst at Catalyst to provide investment research for several mutual funds. From 2005-2011, he served in various technical and scientific management roles with the Perrigo Company. Mr. Schoonover has an MBA with high distinction from the University of Michigan Ross School of Business and a BS from the University of Michigan.

As of the end of March, U.S. companies authorized $264 billion in buybacks this year compared to just $242 billion at the same time last year. We outlined several reasons for this uptick in past articles, and we believe that these trends may lead to more buyback announcements in 2019 than we saw in the record-setting year last year.

However, April has been an unusually slow month. As of April 24, there has been just 25 buyback announcements for a total of $8 billion. Looking at year-to-date announcements through April 24, there have been $272 billion in 2019 compared to $278 billion in 2018.

Exhibit 1: As of April 24, U.S. companies have authorized $272 billion in buybacks in 2019.

Sector Buyback Amount ($ billions) % of 2019 Total
Information Technology $53 20%
Consumer Discretionary $49 18%
Industrials $47 17%
Energy $30 11%
Health Care $25 9%
Financials $24 9%
Communication Services $17 6%
Materials $14 5%
Consumer Staples $7 3%
Real Estate $4 1%
Utilities $1 0%

Source: Bloomberg LP, FactSet, and Catalyst Capital Advisors LLC.

Exhibit 2: After a strong start to the year, buyback announcements have decreased significantly in April.

Month Buyback Amount ($ billions) # Announcements
1/2019 $108 79
2/2019 $123 124
3/2019 $32 63
4/2019 $8 25

Source: Bloomberg LP, FactSet, and Catalyst Capital Advisors LLC.

Apple Inc. (AAPL), which announced a $100 billion buyback last May, is expected to report earnings after the close on April 30. Based on AAPL’s buyback history and continued plan to be cash neutral, I would not be surprised to see another $100 billion buyback. If this materializes, then 2019 remains on track to outperform 2018.

Exhibit 3: AAPL history with buybacks.

Date Buyback Announcement ($ billions) Approximate Repurchase Amount Since Last Announcement ($ billions)
4/23/2013 $50 $2
4/23/2014 $30 $44
4/27/2015 $50 $34
4/26/16 $35 $37
5/2/17 $35 $34
5/1/18 $100 $49
4/30/18 Est. $50-$100 $48 through 3 quarters

Source: InsiderScore and Catalyst Capital Advisors LLC.

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