S&P Dow Jones Indices announced today that preliminary results show that S&P 500® stock buybacks, or share repurchases, increased 18.1% to $118.1 billion during the second quarter of 2013, up from the$100.0 billion spent on share repurchases during the first quarter of 2013. Compared to the $111.7 billion spent in the second quarter of 2012, buybacks are up 5.6%.

For the 12 month period (ending June 2013), S&P 500 issues increased their buyback expenditures by 4.7% to $420.9 billionfrom the $402.0 billion posted in the prior 12 month period. The high mark was reached in 2007, when companies spent $589.1 billion over the 12 month period, with the recession low point being $24.2 billion in the second quarter of 2009.

"The second quarter breaks into two stories – one with and the other without Apple," says Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices. "Apple spent $16 billion on buybacks in the second quarter, accounting for 13.5% of all buybacks in the period and setting a new index record for quarterly buybacks by surpassing International Businesses Machines' Q2 2007 expenditure of $15.7 billion." 

"Excluding Apple, the 18.1% Q2 increase in buybacks becomes 2.0%. If we adjust for the average stock price in Q2 being 6.3% higher than in Q1, the takeaway is that less shares were actually repurchased in Q2 than Q1, even as the headline, legitimately, reads 18%," adds Silverblatt.

"Overall, companies continued to protect their earnings from dilution due to option execution with the actual share count slightly ticking down," notes Silverblatt. "The data, however, shows that there was a wide mix – 242 issues increasing their diluted share count compared to 225 issues reducing them. Significant changes (generally considered 1% or greater) favored reductions, as 90 issues reduced their count by at least 1%, with 58 issues increasing them at least 1%."

The Information Technology sector, with the help of Apple, easily maintained its dominance of buybacks, accounting for 31.5% of all expenditures, up from 19.6% in the first quarter. The Industrials sector increased its expenditures and percentage of buybacks, accounting for 12.2% of expenditures, up from 9.0% in the first quarter. Of the 309 which reported buybacks, 252 companies paid a cash dividend, with their 12 month buybacks 42% higher than dividends.

On an issue basis, after Apple, Merck made the second largest expenditure, at $5.5 billion, followed by Exxon Mobile with $4.0 billion, General Electric with $3.9 billion and International Business Machines with $3.6 billion.

"Q3 share prices are running 3.7% higher than Q2 and 19.2% higher than Q3 of last year. Additionally, market uncertainty has increased via the Fed expectation and events in the Middle East, which may be testing corporate willingness to go beyond the necessary EPS protection to do share count reduction," concluded Silverblatt.