1--Who's Buying Stocks??? With $128 Billion In Equity Outflows, Barclays Asks "Who's Buying Stocks" And Gives An Answer
The biggest buyers of equities are corporates themselves with S&P 500 net buybacks rising to $500bn over the last four quarters from $375bn in 2013. To put that into perspective, total inflows into equity MFs and ETFs were $159bn in 2013. With about $1tr of dividends being paid out globally, reinvested dividends are also a key source of flow, particularly outside the US where buybacks are less popular. Reinvested dividend payments rose in early August. The drop in IPOs YTD (~50%) and the continuation of M&A have also been supportive from a demand-supply perspective.
Based on those S&P 500 companies that have reported buyback data for Q2, gross buybacks fell by $22bn (-15%) from Q1 to Q2 and net repurchases declined by $11bn (-10%) (Figure 16). For the first time since 2012, more S&P 500 companies reduced the amount of buybacks in Q2 than increased the size (Figure 17). However, this followed a strong Q1 when companies seemingly upped repurchases during the selloff. Trailing four quarter buybacks remain stable. We would expect flat to mildly lower growth in Q3 as weak comps roll off. As a percentage of market cap, net buybacks in Q2 are 1.5% annualized, about the same level of 2012-2014 as buybacks have kept pace with market value.
Several big-name hedge fund investors soured on U.S. stocks in the second quarter and moved to gold and other bearish bets, failing to anticipate the stock market rally in the current quarter.
Noting the recent run-up in the benchmark Standard & Poor's 500 index to fresh record highs while economic growth remains weak and corporate earnings are stagnant — George Soros, Jeffrey Gundlach, Carl Icahn and David Tepper were among billionaire hedge fund investors and money managers who slashed their long equity positions in the second quarter, according to regulatory filings.
All three major U.S. stock indexes ended at all-time highs on Monday, extending their record-setting climb of the past few weeks. The trailing price to earnings ratio of the S&P 500 is now at 20, a level at the high end of its historical range
Varlik, Mevlutoglu and Oguz agree that the most important aspect of the summit was its timing after the coup attempt and whether its outcome could be a turning point not only in Turkish-Russian ties, but also in relations with the United States, NATO and the EU, particularly regarding Syria. Obviously, Ankara leaders returned from the summit with high hopes. Moscow tends to be a bit more guarded....