Can Corporate America Make the Switch from Returning Cash to Investing It?

I caught a nice mention from Kopin Tan, who writes the Streetwise column at Barron’s each weekend, in reference to the buyback bonzanza that’s been so important to the rally in equities this past year…

Confetti wasn’t the only thing to rain down from the skies as 2013 came to a close. Cash—gobs of it!—came fluttering right into our outstretched hands. Really, it did!

Of course, you had to be at the right place at the right time. And by that I mean you had to be a shareholder, preferably of large U.S. companies, which have been fervently buying back shares and practically shoveling cash back to their shareholders. In the fourth quarter, S&P 500 companies may have bought back nearly $138 billion worth of stock, says Howard Silverblatt, Standard & Poor’s senior analyst. If that estimate proves correct as companies file their quarterly disclosures, it’ll be the biggest quarter for buybacks since 2007 and a 40% jump from the level a year ago.

Companies have already repurchased a staggering $445 billion worth of shares in the 12 months ended on Sept. 30. Joshua Brown, who writes the Reformed Broker blog and is CEO of Ritholtz Wealth Management, puts that number in perspective: $445 billion is enough to buy more than half of all buildings and real estate in Manhattan (eat your heart out, Donald Trump!). Or you could hoover up every team in the NFL, NBA, NHL, and Major League Baseball five times over and still have enough left to tack on a little complementary network called ESPN.

Kopin goes on to describe the challenge for markets as US corporations shift gears to return ON capital from years and years during which all that was expected of them was return OF capital.

Click over for the full piece:

Buyback Bonbons (Barron’s)

And here’s my original post he’s referencing:

Merry F%@#ing Buyback Christmas (TRB)