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The Problem with Buybacks

Valuewalk has a nice mention of a new recent report from Goldman on buybacks (US Thematic Views, Oct 7th will update with attachment if they give me permission).  

In the report Goldman demonstrates how focusing on total cash distributions to shareholders has performed better than dividends or buybacks alone (shareholder yield book readers already know this).  Investors in buyback or divided strategies are making the same mistake – namely, ignoring roughly half of how all companies distribute their cash. 

A nice chart I had not seen before shows that the number of S&P 500 companies buying back stock has gone from ~40% in 1992 to over 80% today.

Below is the alpha from all three of the strategies, and the tickers you can use to track their baskets on Bloomy:

 

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