The announcement this week of share buybacks by Balfour Beatty and Domino’s Pizza, as well as plans for such a scheme at Gamesys and intentions to ask for shareholders’ permission to buy back stock at IP Group, all suggest that this way of return capital to shareholders is back in fashion, says Russ Mould, AJ Bell Investment Director.
Shareholders must now decide whether this is a sign that corporate confidence is flooding back and the good times are about to roll once more, or whether boardrooms are letting down their guard too quickly in the wake of the pandemic.
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Source: Company accounts
“UK-listed firms have so far announced or confirmed buybacks with a value of more than £2 billion in 2021. This includes six FTSE 100 firms – Barclays, Berkeley, CRH, Rightmove, Sage and Standard Chartered.
“This is a huge turnaround from 2020 when buyback programmes with a value of more than £10 billion were scrapped and just £1.6 billion approved and carried out from March to December in 2020, after the pandemic had struck. During that time span fourteen members of the FE 100 shelved or put buyback schemes on ice (some of whom have started to act subsequently) – Ashtead, Berkeley, CRH, Diageo, Ferguson, HSBC, Next, Pearson, Rightmove, Royal Dutch Shell, RELX, Sage, Standard Chartered and WPP.
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