Wondering why stocks rose the most in over three years in February? Bloomberg reports that $104 billion in repurchases were announced last month—the most since TrimTabs Investment Research began tracking the data in 1995. You can read the full story here. The highlights are below.
Even with 10-year Treasury yields holding below 2.1 percent, economic growth trailing forecasts and earnings estimates deteriorating, the stock market snapped back last month as companies announced an average of more than $5 billion in buybacks each day. That’s enough to cover about 2 percent of the value of shares traded on U.S. exchanges, data compiled by Bloomberg show.
“Valuations are somewhat stretched right now, so it’s puzzling a little bit to see this kind of activity,” said Todd Lowenstein, who helps manage $16 billion at HighMark Capital Management Inc. in Los Angeles. “If you’re a contrarian, this level of buyback activity spooks you a little bit because the track record is not impressive in terms of companies’ ability to buy stock at the right price at the right time.”
Jeremy Jones, CFA
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