Magazine article Business Credit

S&P 500 4th Quarter Buyback Activity Soars to $104 Billion

Magazine article Business Credit

S&P 500 4th Quarter Buyback Activity Soars to $104 Billion

Article excerpt

Standard & Poor's announced that S&P 500 fourth quarter buyback activity has surged 57 percent from that of the fourth quarter 2004. Standard & Poor's data shows that stock buybacks in the S&P 500 has increased to $104 billion for the fourth quarter of 2005 from the $66 billion registered during the fourth quarter of 2004. According to Standard & Poor's, companies take advantage of stock buybacks for several reasons: to reduce their overall share count (thereby increasing current shareholder value), to reissue shares for mergers and acquisitions, and to satisfy employees looking to exercise their stock options. Merger & acquisition activity within the S&P 500 has picked up, with over $250 billion awaiting consummation. While reissuance of shares to cover existing employee stock options is still a major component of buybacks, Standard & Poor's has noted the significant number of issues that have actually reduced their share count.

"The impact of the share count reduction was a significant boost to earnings per share for 52 issues in the S&P 500 during the fourth quarter," says Silverblatt, who just authored an S&P report on the buybacks and the impact of share reduction. …

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