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Institutional Investors Divided on Buybacks

As companies repurchase shares at record levels, a survey shows a range of opinions among asset managers

By Susan Kelly | Updated on April 13, 2016
institutional investors and stock buybacksAs corporate stock buybacks have grown in size in recent years, they’ve become more controversial. Activist investors have been pressuring companies to boost their share repurchases, while other institutional investors have argued against buybacks.

Most notably, BlackRock CEO Larry Fink sent a letter last year to CEOs of large companies urging them not to let share buybacks and dividends distract from their focus on long-term growth.

Companies traditionally have repurchased some shares to offset the stock options they issue to employees. But over the past couple of years, more companies have stepped up their share purchases to the point where they’re buying back enough stock to significantly reduce their outstanding shares, said Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

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