Data regarding the return on investment of stock-repurchase programs produces new metrics for shareholders who want to see whether cash earmarked for buybacks has been well spent. In many instances the answer is no. Buyback ROI for all Standard & Poor's 500 companies trailed total returns to shareholders by 5.5 percentage points on average in the two years throughDecember2014, according to the latest iteration of the Corporate Buyback Scorecard, produced each quarter for Institutional Investor by New York-based financial analytics firm For-tuna Advisors using data from Capital IQ. The outlook casts future repurchase plans in an uncertain light as the bull market ages. "Managers need to contemplate how long this bull market will last forthe market, their industry and especially their companies," says Fortuna CEO Gregory Milano. The possibility of a shift in the economic climate may warrant conserving capital now to weather difficulties and resuming buybacks after a correction. Countervailing factors, notably the plunge in oil prices and continuing low interest rates, argue for continuing buybacks.
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