Share Buybacks

Studying buyback activity can provide valuable clues about the future prospects of a company and help to predict movements in share price

Information related to SHARE Buybacks

When companies repurchase their own stock (commonly known as a buyback) it reduces the number of shares available to other investors. By limiting supply in this way the basic laws of economics suggest that the price of the remaining stock increases.

Therefore, share buybacks are a means of supporting the share price as an alternative to paying dividends by reducing the number of shares available to the investment community. Companies may decide that they can offer existing shareholders the best return by utilising spare cash in this way.

Share buybacks are the converse of issuing new shares for sale under a secondary offering which often dilutes the ownership of existing shareholders by increasing the number of shares.

Such issuances are designed to raise cash for a project or acquisition, whilst buybacks do the reverse. In the case of a share buyback, the company spends cash on shares and may decide to hold them in Treasury or cancel them. Either way, they become unavailable to existing or new shareholders.

However…

In many companies, particularly those with a large market cap, buyback trades happen daily, so monitoring each and every trade becomes meaningless.

As is often the case in equity markets, news influences price more than business fundamentals.

Predictions related to buybacks

Past

Our data is collated from daily share buybacks announcements and can easily be aggregated to look at buybacks and study behavioural patterns or anomalies.

Present

This methodology can be applied to your investment research process, decisions and analysis. Create notifications for new data and receive such alerts in a comprehensible format.

Future

Our data includes ‘Intentions and Authorizations,’ allowing us to inform clients on what is likely to occur. You can study the fundamentals of such data by reviewing a company’s stated intentions.

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INSIGHTS

perspectives on share buybacks

In addition to announcing trades that have occurred, companies mention their intentions in advance. Intentions may take the form of an authorisation by a board which authorises a number of shares to be repurchased over a specified time period and subject to certain conditions.

We collect, sort, and put such information into a readable format that is easier for our clients to comprehend. We can inform clients on what is likely to happen as well as what has already occurred.

How to find a hint for a future in buybacks. Smart Insider

At a company level, through the process of aggregation, buyback data allows sophisticated investors to gain valuable insights

Buybacks in sector or market. Smart Insider

Sector and Market specific buybacks

Aggregating data by market sector can provide insights into the confidence associated with each sector.

Similarly, reviewing data according to an individual market or index can highlight regional nuances.

This data is most useful when studied historically.
Our time series reports makes it easy to identify the relevant trends and changes associated with share buybacks.

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Analysts and Fund Managers seeking to incorporate Insider insights signals into their investment process
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Quants looking to enhance systematic strategies with alternative data sources
ESG specialists seeking aspects of corporate governance

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FAQ’s

What kind of data do you collect and analyse?

– Every share transaction in listed stocks globally reported by directors and senior management where reporting standards exist.
– Every regulatory report of insider transaction received.
– Every regulatory report of insider transactions reported in any market.
– Every listed stock is monitored.
– Every regulatory report of insider transaction received.
– Over 60 markets – we are global.
– Up to 25 years of historic data depending on the market.
– We have wider coverage and deeper history than any other provider.

Why should I trust your data?

Our proprietary method of analysing and reporting data means that experienced analysts read and classify transactions, accurately recording the true nature of a reported trade in a consistent manner.
Our software minimises that risk through a series of checks and verifications.
Complex announcements are escalated for a second opinion. Survivor bias is eliminated, historic data includes defunct companies, we never delete transactions.

Does your data contain subjective opinions?

Whilst our product incorporates data from multiple sources using proprietary data classifications and analysis fields, our pure quant delivery remains factual and free from subjective analysis or interpretation.
Supplemental fields are based on algorithms and give clients the tools needed to identify trends within transactions.
The aim is to simplify analysis by giving clear signals as to where to find the alpha.

How do you get your data?

Data is uploaded into our database using proprietary software and delivered in near real-time to quant clients. Usually, it is around 1,000 trades per day.
Regulatory reports are tracked in real-time ensuring that we know where and when transactions are reported in every market. We use proprietary software to categorise and analyse the metadata before passing it to the appropriate analyst to process.
While processing requires manual oversight by skilled analysts, much of the production and QA process is automated to ensure data is of the highest quality.

Where do you get your data from?

– The core – individual transaction reports authored by issuers (listed companies) and made public under listing rules within each market.
– Additional data from ancillary datasets: corporate reporting dates, salary, buyback data.

How do you process data?

– Our know-how process verifies and supplements reported data.
– Built-in algorithms identify data flags and analysis fields, for example, a Director Score.
– Various transaction flags are added to enable sophisticated filtering.