According to Investopedia, "[c]ompanies [can] buy back shares on the open market over an extended period of time and may even have an outlined share repurchase program that purchases shares at certain times or at regular intervals." Assuming the company doesn't voluntarily outline a policy, is there any way to differentiate fluctuations in stock price that are the result of buybacks from those that occur naturally due to public demand? I'm mostly interested in major public markets in the US.
3 Answers
When companies announce buybacks, they do so in broad terms, authorizing a number of shares or dollar amount over a given period of time. Along with that is there's usually a nebulous statement along the lines of 'the company is given broad discretion to enter into transactions on the open market or in private transactions, etc.".
There are some SEC forms that reflect the details of an announced buyback (announcement and expiration date, dollar amount approved by the BOD, etc.).
There are also reporting requirements that must be filed regarding purchases made during each month of the preceding quarter. This info includes number of shares purchased, average price, number of shares yet to be purchased,
There are newsletters and web sites that keep track of the details of announced buy backs but because of the above, it's impossible to nail down the details of transactions when they occur.
FWIW, the SEC did a one year study of buybacks and found that they lead to about a 3% jump in share in the month after the announcement. They also observed that in the week after a buyback announcement, five times as much stock (in dollars) was sold by corporate execs than in the week before the announcement. Conflict of interest?
answered Jul 31, 2019 at 12:20
I don't think you'll find any data that closely relates stock buybacks and the stock price. But you should be able to find the number of outstanding shares on a quarterly basis and you can relate that number to the stock price.
However, due to the enormous number of outstanding shares in most companies the day to day activity and news will have a much larger impact on the stock price than the buybacks. So to see a general trend you would have to essentially determine exactly what the stock price should be without the buybacks depending on the financials and the news (in short, be better at valuating companies than Warren Buffett), and then see the impact the buybacks have.
So in short, see Bob Baerker's answer and rely on the SEC study.
If a company decides to buy back own stocks it has to be terminated at the annual stockholder meeting, which is public. So if a company has the permission to buy back own stocks it isn't a secrete.
Usually, when the company announces this decision, it also announces a price-limit or -range, so if you observe huge buys in a certain region, you might conclude that they aren't caused by the company itself, when the price is out of the mentioned range.
If the buys happen within the range I don't see a chance to decide whether the buyer is the company itself or another big investor without any further information (But I'm curious if someone has additional information).
