S&P Equity Research Finds Majority of Buybacks Have Disappointing Results

    NEW YORK, Nov. 6 /PRNewswire/ -- While 2007's record-setting stock
 repurchasing activity may make it the "Year of the Buyback," a recent
 Standard & Poor's Equity Research study shows this widely practiced
 strategy to boost company share prices may not lead to the anticipated
 positive benefits. In fact, Standard & Poor's Equity Research's look at
 corporate share repurchases among S&P 500 companies over the last 18 months
 showed that only one out of every four S&P 500 companies (103 companies)
 that repurchased shares outperformed the Index, while the remainder would
 have been better off putting their excess cash into an S&P 500 Index
 exchange-traded fund. This was among the findings from the Standard &
 Poor's report titled, "How Rewarding Is Corporate Share Repurchase
 Activity?" which was published today.
     "The tendency is to assume that corporate share repurchases lead to a
 sustained uptick in stock performance, and the more activity the better,"
 note the study's authors, Stewart Glickman, Associate Director, and Todd
 Rosenbluth, Senior Associate Director, Standard & Poor's Equity Research.
 "While these initiatives may create a positive aura around a company's
 shares, our study showed an inverse link between repurchase activity and
 the returns achieved - the companies that used buybacks most aggressively
 actually generated the weakest returns over the course of the study period.
 Based on these findings, we recommend shareholders take a close look at a
 company's buyback history and their results before bidding up share
 prices."
     The study reviewed the buyback activity of the companies comprising the
 S&P 500 for 18 months ending in June 2007, and compared it to stock prices
 as of the quarter ended September 2007. During this timeframe, 423
 companies reported share repurchases. For 77 companies, no repurchase
 activity was found, and these companies were classified as "zero
 repurchasers." These companies may have engaged in share repurchases that
 were insignificant and not disclosed within the details of the company's
 SEC filings.
     "S&P Equity Research undertook this analysis to assess the conventional
 wisdom on buyback activity and question the decision-making process when
 using large amounts of shareholder funds for this purpose," said Stephen
 Biggar, Global Director of Equity Research for S&P. "We believe that share
 buybacks may sometimes be a subtle admittance by managements that
 re-investing in their core operations does not represent a good
 opportunity. Therefore, we are not surprised that some of the most
 aggressive repurchasers on our list had the worst track records. S&P Equity
 Research was uniquely positioned to undertake this study given its breadth
 of coverage, globally consistent fundamental research methodology and
 demonstrated thought leadership in equity market analysis."
     Members of the media can request a copy of the Executive Summary of
 this report from the communications contact listed at the end of this
 release.
     The analysts quoted above are Standard & Poor's equity analysts. They
 have no affiliation with any company they cover, nor any ownership interest
 in any companies they cover.
     About Standard & Poor's Equity Research Services
     As the world's largest producer of independent equity research,
 Standard & Poor's licenses its research to over 1,000 institutions for
 their investors and advisors, including 19 of the top 20 securities firms,
 13 of the top 20 banks, and 11 of the top 20 life insurance companies.
 Standard & Poor's team of 120 experienced U.S., European and Asian equity
 analysts use a fundamental, bottom-up approach to assess a global universe
 of approximately 2,000 equities across more than 120 industries worldwide.
 Follow Standard & Poor's equity analysts' U.S. market commentary each day
 at http://www.equityresearch.standardandpoors.com/.
     The equity research reports and recommendations provided by Standard &
 Poor's Equity Research Services are performed separately from any other
 analytic activity of Standard & Poor's. Standard & Poor's Equity Research
 Services has no access to non-public information received by other units of
 Standard & Poor's. Standard & Poor's does not trade for its own account.
 The analytical and ethical conduct of Standard & Poor's equity analysts is
 governed by the firm's Research Objectivity Policy, a copy of which may
 also be found at www.standardandpoors.com or by clicking here.
     About Standard & Poor's
     Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:   MHP),
 is the world's foremost provider of financial market intelligence,
 including independent credit ratings, indices, risk evaluation, investment
 research and data. With approximately 8,500 employees, including wholly
 owned affiliates, located in 21 countries, Standard & Poor's is an
 essential part of the world's financial infrastructure and has played a
 leading role for more than 140 years in providing investors with the
 independent benchmarks they need to feel more confident about their
 investment and financial decisions. For more information, visit
 http://www.standardandpoors.com.
     For more information contact:
      Jeff Sexton
      Communications
      Standard & Poor's
      Equity Research
      212 438 3448
      Jeff_Sexton@standardandpoors.com
 
 

SOURCE Standard & Poor's

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