Why do some buyback stocks perform and others not?įirst, not every company that announces a stock buyback actually follows through and executes the buyback as announced. I knew the service was needed because, while buybacks as a group outperform the S&P 500 by a wide margin, not every buyback is a winner. In 1997, I launched the nation’s first investment advisory to focus on finding winning buyback stocks - The Buyback Letter – featuring unique indexed portfolios constructed exclusively from buyback stocks In the dust … and have for over 2 decades! “Buyback Stocks” consistently leave the S&P 500 When I read these results, I began my own research and followed the stocks of select companies buying back their own shares at significant volumes.Īnd my work soon confirmed what the university studies had found…. Had you owned a $100,000 portfolio of these stocks, it would have grown to $859,440 in one decade – almost a million dollars. In addition, another university study found that a different group of buyback stocks generated 24% average annual return over 10 years. Result: Stocks from companies repurchasing their own shares returned a whopping 136% gain – almost double the 70% return for companies that did not buy back their own shares. stocks for companies that did not invest in their own shares. It showed that in one 10-year period, buyback stocks produced a return 388% greater than that broad market averages.Īnd for another 4-year period, the study compared performance of stocks for companies that had just made repurchase announcements vs. Namely, that the best-performing stocks are often those of companies that actively repurchase their own shares – commonly called “buyback stocks.” My select Buybacks can now give you an almost “unfair advantage” in the stock market.Ī classic study from the University of Illinois 1 revealed what was once perhaps the best-kept - and most overlooked - stock market secret in America: If you do not regularly and deliberately invest in buyback stocks, you are missing out on superior gains, because… Your profit on this trade: $9,930 in less than a year. A $10,000 investment in the stock would have nearly tripled to $29,050 in a little over a year.Ĭable & Wireless also made a major repurchase of their shares, which proceeded to gain 99.3% in 9 months. If you did buy, a $10,000 position in the stock would have turned into $28,670 in just 12 months.Īnd did you grab shares of Autozone when they made their buyback announcement? Following the announcement, their shares rose 190.5% in 14 months. Says Lynch, “Stock buybacks are the simplest and best way a company can reward its investors.”įor instance, did you buy Citrix Systems when the company announced a plan to repurchase their shares? If not, you missed out on 186.7% profit in one year. Some of the world’s most successful investors, including multi-billionaire Warren Buffett and the legendary Peter Lynch, are enthusiastic advocates of owning buyback stocks. If there is a better buy signal than a group of company insiders voting to spend corporate funds on repurchasing shares, I don't know what it is. Think about it: for a company to buy back stock, the share repurchase plan has to be approved and authorized by the Board of Directors. Investing in “buyback” stocks – companies that repurchase their own shares – may be the only 100% legal way today to ethically gain “inside information” on companies that significantly outperform the market.
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