Chart of the day: Rewarding US Shareholders

By Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman

Those who draw their income primarily from wages have been squeezed. However, those that draw more income from their savings and investments have fared better. This is the story behind the growing disparity of income in the United States.

Shareholders have been rewarded. The top Great Graphic was posted by Matt Phillips on Quartz. It was taken from Goldman Sachs Research. It shows both the authorized and executed share buyback schemes among the S&P 500 through Q3 13. The authorized programs area approached record size.

buy back activity

There are a number of ETFs that try to capitalize on share buyback programs or favorable insider activity or strong hand buying. The Bloomberg chart here shows a the S&P 500s performance since the beginning of last year (purple line), with three ETFs in this space. The white line is PowerShares Buyback Achievers Portfolio (PKW). The yellow line is the Guggenheim Insider Sentiment (NFO), which looks at trends in insider buying and analysts’ opinions. The green line is TrimTabs Float Shrink (TTFS). It uses a screen for to assess the quality of the reduction in the free float. This summary of ETFs in this space should not be confused with a trade recommendation or investment advice.

buyback etf

We are skeptical, though of Phillips effort to draw a connection between the cash holdings of almost $2 trillion to the share buyback efforts. Yet, it seems as if many corporations are borrowing to fund the repurchase programs.

Separately, Phillips points to another way shareholders are being rewarded: dividends. He notes that as of the end of January 420 of the S&P 500 were paying dividends, which is the most since 1998. S&P 500 companies will pay out an estimated $330 bln in dividends this year, which represents a new record.

 

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Marc Chandler

Marc Chandler

Marc Chandler has been covering the global capital markets in one fashion or another for nearly 25 years, working at economic consulting firms and global investment banks. Chandler attended North Central College for undergraduate. He holds masters degrees from Northern Illinois University and University of Pittsburgh in American History and International Political Economy. Currently Chandler teaches at New York University Center for Global Affairss, where he is an associate professor.

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