Buybacks grow 50% year-over-year; near pre-recession highs

Aggregate share buybacks for the S&P 500 grew 50% in Q1 to $154.2 billion, and amounted to the third largest quarterly total since 2005. The biggest contributor to the Q1 total was Apple’s record $18.6 billion in repurchases, but IBM also had an uncharacteristically active quarter with $8.3 billion in buybacks. In addition, five of the top ten companies by dollar-value buybacks in Q1 are traditionally not big spenders, and each spent more money on buybacks in Q1 than in any quarter in at least ten years. These companies included FedEx, Boeing, Abbott Laboratories, Corning, and eBay.

Going forward, however, it seems unlikely that aggregate buyback activity will match that of Q1. Most of the five aforementioned companies indicated that forward buyback activity would not keep pace with Q1. And, in today’s earnings call, FedEx announced that it repurchased about $1 billion in the second calendar quarter (as compared to $2.8 billion in Q1).

In addition, both Apple and IBM seem poised to slow their repurchase activity. During the Q1 earnings call, Apple raised its share repurchase authorization from $60 billion (of which $14 billion remained) to $90 billion. This works out to $6.3 billion per quarter if Apple completes the program by its December 2015 time frame. IBM is also expected to reduce its per-quarter spending. CFO Martin Schroeter admitted that share repurchases were front-end loaded, and that full year spending on buybacks would be slightly less than 2013 ($14.0 billion). This would suggest quarterly spending will be less than $2 billion through the remainder of 2014.

Finally, IBM isn’t the only big spender that is expected to slow its pace of buybacks in 2014 relative to 2013. Of the top ten companies from 2013, Apple is the only stock that has picked up activity from the pace in 2013. General Electric disclosed that discretionary buybacks would be reduced, and Exxon Mobil, AT&T, Oracle, and Wal-Mart’s activity in Q1 was less than the average spending throughout 2013.