S&P 500 Buyback Index

AAA

DEFINITION of 'S&P 500 Buyback Index'

An index designed to track the performance of the 100 S&P 500 stocks with the highest buyback ratios over the past 12 months. The S&P 500 Buyback Index is equal-weighted and rebalanced quarterly, with the rebalancing reference dates occurring on the last trading day of each calendar quarter. Index changes are effective after market close on the third Friday of the month after the reference date.

INVESTOPEDIA EXPLAINS 'S&P 500 Buyback Index'

The S&P 500 Buyback Index ranks the S&P 500 members in descending order of their buyback ratios every quarter, and includes the top 100 in the Buyback Index. The Index gives investors an avenue to invest in companies that are aggressively buying back their own shares. A share buyback is a compelling route for a company to generate value for its shareholders, since a buyback contracts share float, improving per-share measures of profitability and cash flow like EPS and CFPS.  

In 2013, share buybacks increased to multi-year highs as companies were flush with cash on account of record earnings and the ability to borrow at interest rates near historic lows. As of December 2013, the biggest sector contributors to the S&P 500 Buyback Index were consumer discretionary (22%), information technology (19%), financials (18.5%) and health care (15.5%). These four sectors together constituted three-fourths of the Buyback index.

The positive reception by investors to share buybacks can be gauged by the outperformance of the S&P 500 Buyback Index, compared to the S&P 500. 

RELATED TERMS
  1. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  2. Leveraged Buyback

    A repurchase of significant amount of shares through the use ...
  3. Expanded Share Buyback

    An increase in a company’s existing share repurchase plan. An ...
  4. Retail Repurchase Agreement

    An alternative to regular savings deposits. Under a retail repurchase ...
  5. Term Repurchase Agreement

    Under a term repurchase agreement, a bank will agree to buy securities ...
  6. Accelerated Share Repurchase - ...

    A specific method by which corporations can repurchase outstanding ...
Related Articles
  1. Mergers And Acquisitions: Understanding ...
    Fundamental Analysis

    Mergers And Acquisitions: Understanding ...

  2. What is an odd-lot buyback?
    Investing

    What is an odd-lot buyback?

  3. Analyzing Investments With Solvency ...
    Fundamental Analysis

    Analyzing Investments With Solvency ...

  4. Logic: The Antidote To Emotional Investing
    Investing Basics

    Logic: The Antidote To Emotional Investing

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center