Firms with larger buybacks outperformed the market for several quarters, but that streak is in jeopardy, as the SP 500 Buyback Index is down 0.2 percent for the quarter. It has outperformed the SP 500 in the last six quarters but trails the broader benchmark so far in the second quarter. Corporate buybacks have been strong in recent years, but higher stock valuations reduce the lift companies get from their repurchases. With valuations not as attractive as where they were, it makes sense that investors are going to be a bit more selective and not reward buybacks as broadly as they had for the last couple of years, said Jill Carey, U.S. equity strategist at Bank of America Merrill Lynch in New York.
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