U.S. Corporate Buybacks Approach $1 Trillion, Yet Insiders Aren't Following Suit
N.R. Finch
U.S. companies have authorized nearly $1 trillion in stock buybacks in the first half of the year — a record — yet corporate insiders are not following up with their own money. This means the "confidence signal" that buybacks are supposed to send may be hollow, and investors should look more carefully at what this trillion dollars really represents.
A trillion in buybacks — where is the money going?
Total buyback authorizations in the first half approached $1 trillion. Birinyi Associates president Jeffrey Rubin called the scale "extraordinary"; actual completed repurchases also sit at all-time highs.
But the spending is heavily concentrated: tech accounts for 45%, financials for 23% — together, 68% of the total, according to EPFR analyst Winston Chua.
This means → the trillion-dollar buyback wave is not a broad vote of confidence across industries. A narrow set of sectors is doing the heavy lifting, and market breadth is actually shrinking.
Do companies actually buy their own stock at the right time?
Research Affiliates founder Rob Arnott is blunt: his research found buybacks are negatively correlated with subsequent returns — the more aggressively a company repurchases, the worse its stock tends to do afterward.
MarketWatch's calculations back this up: over the past decade, quarters with buyback authorizations above the prior quarter saw lower average 12-month returns than quarters with lower authorizations.
In plain terms = corporate management, as a group, has a poor track record of timing its own stock purchases.
Why aren't insiders buying alongside the company?
Arnott flags a key contradiction: buyback surges often coincide with executives exercising and cashing out their stock options. He puts it plainly — "buybacks to some extent serve to accommodate the redemption of stock options."
In plain terms = the company uses corporate cash to buy back shares and support the price, while management simultaneously converts options into cash. That is not conviction — it looks more like a coordinated exit.
University of Michigan professor Nejat Seyhun, a leading authority on insider behavior, says insiders have been "mildly pessimistic" in recent months. He concludes that the record buyback activity is likely to have a "quite limited" market boost.
What can insider behavior actually tell us?
Seyhun's framework is straightforward: when insiders buy alongside a company's repurchase program, it is a positive signal for the stock. When insiders sell, returns are flat.
This means → the buyback itself is not the signal. Whether insiders are willing to put their own money in is the variable that separates meaningful repurchases from hollow ones.
Which companies pass both tests — buybacks and insider buying?
Seyhun's framework doubles as a screen. Among large-caps with market values above $20 billion, companies with both active recent buybacks and net insider buying include:
Abbott Laboratories (~$163.9B), S&P Global (~$120.8B), ADP (~$89.4B), 3M (~$85.5B), Illinois Tool Works (~$77.0B), Intuit (~$73.2B), Nike (~$60.3B), Cencora (~$55.7B), AutoZone (~$51.1B), among others.
This reflects a simple reality: within the trillion-dollar buyback wave, the companies where insiders are actually voting with their own wallets are only a small fraction.
Content is for reference only, not financial advice.