Apple’s stock repurchases paying off

Employees and customers cheered at the Apple store opening in Wuxi, China. Apple was up 25 percent since it spent $18 billion to repurchase stocks in the first quarter of this year. In  2013, it was up 32 percent after spending $16 billion.

ChinaFotoPress via Getty Images

Employees and customers cheered at the Apple store opening in Wuxi, China. Apple was up 25 percent since it spent $18 billion to repurchase stocks in the first quarter of this year. In 2013, it was up 32 percent after spending $16 billion.

NEW YORK — With Apple’s repurchases staking a claim as the most profitable on record, buybacks remain one of America’s most popular antidotes to bears.

The iPhone maker is up 25 percent since it spent $18 billion on its own shares between January and March and rallied 32 percent after a $16 billion buyback in 2013.


Those are the highest four-month returns among the 20 biggest quarterly repurchases by any company since 1998, according to data compiled by Bloomberg and Standard & Poor’s.

S&P 500 constituents have spent $211 billion on their own stock this year amid concern the five-year bull market is prone to selloffs such as last week’s 2.7 percent retreat.

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Spurred on by zero-percent interest rates and the highest cash balances on record, companies are plowing capital into the equity market to curb supply and buttress per-share earnings.

While Scott Wren of Wells Fargo Advisors says there are usually better things to do with capital, companies with the most repurchases have beat the S&P 500 during the bull market.

‘‘It’s a low-quality way to increase your earnings, and obviously I’d much rather see companies grow the business through revenue,’’ Wren, the St. Louis-based senior equity strategist at Wells Fargo Advisors, said in a phone interview. ‘‘But when the economy’s growing at 2 to 2.5 percent, you have to do what you can to keep the ball rolling.’’


Indexes of US and global equities fell in July, halting a five-month streak of gains amid speculation the threat of inflation is rising in the United States while Argentina defaulted on debt and Portugal’s Banco Espirito Santo was ordered to raise capital.

There were $159 billion of buybacks in the first quarter, the most active single three-month period since 2007, when companies spent $172 billion in the third quarter. Shares bought from April through June are on pace to reach about $130 billion, according to S&P.

Apple’s $18 billion repurchase in the first quarter and the $16 billion it spent between April and June of 2013 are the two biggest buybacks by any company in data compiled by S&P starting in 1998. They came as the stock advanced as much as 77 percent over 15 months after falling to a 16-month low in April 2013.

The return followed the weakest period for Apple shares in the last decade. After vaulting almost 900 percent from the end of 2005 through September 2012 and becoming the world’s largest company by market value, Apple plunged 44 percent in seven months amid concern about new products and competition.

‘‘Their timing was impeccable,’’ Todd Lowenstein, who helps manage $16 billion at Highmark Capital Management in Los Angeles, said in a July 31 phone interview. ‘‘They went in big, and it said to the market that they had confidence in their business plan and thought their stock was grossly undervalued. That’s worked out well for them.’’

Companies spending the most on their own stock are outperforming the S&P 500. The 100 firms with biggest buybacks relative to market value have gained 5.5 percent this year, compared with a 4.9 percent increase in the benchmark index, according to data compiled by Bloomberg.

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