The 25 Companies Spending Billions On Buybacks (ACE, AKAM, ABC, AOL, AVT, CBOE, CHTR, CSCO, COV, DISCA, DLB, XOM, CVX, HRS, HUN, JASO, JAH, NWSA, RDC, LUV, STJ, BSX, MSI, V, HPQ)

August 11, 2011 by Jon C. Ogg

It is no secret that the market volatility has many investors rattled.  What is very counter-intuitive is that many companies are continuing with most or all of their investor friendly plans regardless of the market.  That means keeping balance sheets strong, but it also means buying back stock and paying out dividends.  In fact, some companies have signaled that they just do not believe the current mayhem will turn into a new 2008 or 2009 situation.

The fresh buybacks we have featured are only the big buybacks which are large in size or large in percentages of the market capitalization of the underlying companies.  The best buyback announcements in August have come from the following: Ace Ltd. (NYSE: ACE); Akamai Technologies Inc. (NASDAQ: AKAM); AmerisourceBergen Corporation (NYSE: ABC); AOL Inc. (NYSE: AOL); Avnet Inc. (NYSE: AVT); CBOE Holdings, Inc. (NASDAQ: CBOE); Charter Communications Inc. (NASDAQ: CHTR); Cisco Systems, Inc. (NASDAQ: CSCO); Covidien plc (NYSE: COV); Discovery Communications, Inc. (NASDAQ: DISCA); Dolby Laboratories, Inc. (NYSE: DLB); Exxon Mobil Corporation (NYSE: XOM); Chevron Corporation (NYSE: CVX); Harris Corporation (NYSE: HRS); Huntsman Corporation (NYSE: HUN); JA Solar Holdings Co., Ltd. (NASDAQ: JASO); Jarden Corporation (NYSE: JAH); News Corp. (NASDAQ: NWSA); Rowan Companies, Inc. (NYSE: RDC); Southwest Airlines Co. (NYSE: LUV); and St. Jude Medical Inc. (NYSE: STJ).

We also saw some large and interesting buybacks in the last week of July from the likes of Boston Scientific Corporation (NYSE: BSX); Motorola Solutions, Inc. (NYSE: MSI); Visa, Inc. (NYSE: V); and Hewlett-Packard Company (NYSE: HPQ).

The companies are using their balance sheets to take advantage of distressed situations.  Ultimately, this could even signal M&A opportunities arising.  As a reminder, companies are not under any obligation to spend a single dollar to repurchase stocks.  These buybacks actually look real, and many have a solid history of buying back shares.  Who needs activist investors when you see these billions and billions being made available to purchase stock.

Here are the companies buying billions in their own stock.

1. Ace Ltd. (NYSE: ACE) decided that enough apparently isn’t enough… With what was about $400 million spent under its prior $600 million share buyback plan, the company’s board of directors approved another $300 million.  This one is higher on the day by 3% to $61.30, but investors do need to consider that Ace has a market cap north of $20 billion today.

2. Akamai Technologies Inc. (NASDAQ: AKAM) is just not a company most investors would think of as a buyback player.  It is media delivery and is a cloud player but shares have been beaten worse than the proverbial red-headed step child.  This week the company approved a $250 million increase in a current buyback program.  This raises the total to $400 million for the twelve-month period ending in early May 2012.  For conjecture, that compares to a market cap of $4.1 billion and the $22.00 share price compares to a 52-week trading range of $20.70 to $54.65.

3. AmerisourceBergen Corporation (NYSE: ABC) is trading higher after the company authorized a new $750 million share repurchase program.  What is interesting is that the company completed its previous buyback plan of $500 million that has been in place just since 2010.  The market cap of this pharmaceutical services company is currently about $9.9 billion and the $36.50 price compares to a 52-week range of $27.09 to $42.50.

4. AOL Inc. (NYSE: AOL) was smashed this week after its earnings report despite some improving metrics.  After shares hit a 52-week low of $10.06 (down almost 60% from highs), the company decided that enough is enough and AOL has announced that it will buy back up to $250 million worth of its shares.  Even after a 16% rise to $11.87, the market cap here is $1.27 billion.

5. Avnet Inc. (NYSE: AVT) is considered a DRAM, flash, and broad memory super-market for the world as it distributes memory from other makers all over the world.  Earnings were mixed this week, but shares have risen because of a buyback announcement of up to $500 million.  Even after shares have risen to almost $27.00 after trading under $24.00, its market cap is only $4.1 billion.  Another hell of a buyback.

6. CBOE Holdings, Inc. (NASDAQ: CBOE) announced a $100 million share buyback earlier this month.  At $23.00, the market cap is $2.05 billion and the 52-week range is $19.60 to $29.70.  This one was expensive but has become more reasonable now and its business has undoubtedly seen an explosion of trading volumes in the market malaise this month.

7. Charter Communications Inc. (NASDAQ: CHTR) is a shocking buyback and frankly it is puzzling when you consider that the company is still leveraged after emerging back from bankruptcy protection.  The cable provider approved a plan this week of up to $200 million versus what is a $4.9 billion market cap.  At $44.90, the 52-week range is $31,36 to $61.15.

8. Cisco Systems, Inc. (NASDAQ: CSCO) has been an unsuccessful buyback leader.  Its shares are under the average buyback prices but it announced Wednesday evening with its earnings that it had spent about $1.5 billion in the last quarter alone to buy back 95 million shares at an average of $15.85 per share.  The company still has more than $10 billion in approved share buybacks.  Too bad this is a buyback that has not worked.

9. Covidien plc (NYSE: COV), a medical devices outfit, is seeing a 6% surge to $47.45 against a 52-week trading range of $35.12 to $57.65.  Thursday morning came news that the company approved a plan to repurchase up to $2 billion in ordinary shares from time to time and based upon market conditions.  Its market cap is over $23 billion, but this is a substantial size.

10 . Discovery Communications, Inc. (NASDAQ: DISCA) approved a new $1 billion share buyback plan early in the month and its market cap is $15 billion.  At $37.41, its 52-week trading range is $34.75 to $45.81.

11. Dolby Laboratories, Inc. (NYSE: DLB) announced earlier in the month that it has added an additional $250 million for its stock repurchase program.  This gives a total of $392.5 million that can now be repurchased under the new and existing combined plan.  At $32.25, the 52-week range is $28.89 to $69.69 and the market cap is about $3.6 billion.

12. & 13. Exxon Mobil Corporation (NYSE: XOM) and Chevron Corporation (NYSE: CVX) are both NOT interrupting their share buyback plans according to a Dow Jones interview on Wednesday.  $80 oil… who cares?  In the last earnings report, Exxon said it would spend another $5 billion in the next quarter buying back stock and Chevron has close up to $2 billion it can spend to buy its shares.

14. Harris Corporation (NYSE: HRS) is a company which offers communications and information technology to government and commercial markets, which means it is probably experiencing some ongoing choppiness in its markets.  Still, it said earlier this month that it would buy back up to $1 billion in shares to replace a prior buyback plan.  At $35.70, the market cap is a mere $4.4 billion and the 52-week range is $34.40 to $53.39.

15. Huntsman Corporation (NYSE: HUN) is recovering on the heels of the prior week’s $100 million share buyback plan.  This was once a takeover target but the credit bubble popped.  Huntsman stock is currently around $13.20 and the 52-week range is $8.47 to $21.52.

16. JA Solar Holdings Co., Ltd. (NASDAQ: JASO) is in the troubled solar sector and things have been very brutal there.  The $3.90 price today compares to a 52-week trading range of $3.28 to $10.24.  The company authorized up to $100 million for share buybacks and the current market cap is about $640 million.

17. Jarden Corporation (NYSE: JAH) an outdoor consumer products company, recently completed what was a $150 million buyback plan.  It approved a new plan, but of up to $500 million that can be used to repurchase stock.  The market cap is only $2.5 billion and the $27.90 price compares to a 52-week range of $25.60 to $37.50.

18. News Corp. (NASDAQ: NWSA) is up after earnings and on word that Rupert Murdoch prefers for COO Chase Carey to take over if anything happens to him.  During July, News Corp. declared up to $5 billion for share buybacks.  Now the company noted that this could be expanded if the company determines that it is undervalued.

19. Rowan Companies, Inc. (NYSE: RDC) is an onshore and offshore oil and gas contract drilling services outfit and the $80 oil threat is not deterring the company either.  This one announced a $100 million buyback plan and its market cap is $4.2 billion.  The $33.00 handle compares to a 52-week range of $24.36 to $44.83.

20. Southwest Airlines Co. (NYSE: LUV) has been hit hard along with the stock market, but a week earlier the company approved a buyback plan of up to $500 million in its common stock.  At $8.25 it has a market cap of $6.6 billion and its 52-week trading range is $8.01 to $14.32.

21. St. Jude Medical Inc. (NYSE: STJ) may be suffering from medical devices and joint replacement weakness if elective surgeries are being put off and delayed.  The company announced earlier in August that it would repurchase up to $500 million.  At $41.50, the market cap is $13.8 billion and the 52-week range is $34.42 to $54.18.

22 – 24. The trend has really increased in August, particularly as the stocks have been pounded and beaten hard.  We saw several big buybacks at the end of July as well: Up to $1 billion at Boston Scientific Corporation (NYSE: BSX) against a market cap of $9.25 billion; up to $2 billion in Motorola Solutions, Inc. (NYSE: MSI) against a current market cap of $13.6 billion; Visa, Inc. (NYSE: V) said it would buy back up to $1 billion in its stock against a $56 billion market cap.

25. The biggie in July was the $10 billion additional authorization from Hewlett-Packard Company (NYSE: HPQ) versus what is a $63 billion market cap currently.  At $30.50, its new 52-week range is $29.75 to $51.99.

Not all of these companies will spend every penny under their approved buyback plans.  Many will, and many will authorize new buyback plans.  Companies are healthier than ever and many of them are telling the stock market that they do not believe the ticker tape.

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JON C. OGG