Stock buybacks may roar to life again in 2021 after being dampened by cash conservation measures to keep balance sheets fortified during the pandemic.

Share repurchases began to accelerate in the third quarter of 2020 (the latest quarter for which numbers are available), when 38% of the S&P 500 bought back at least $5 million worth of shares. That was up from 34% in the second quarter. Total buybacks hit $101.8 billion by dollars invested, up nearly 15% from the second-quarter total.

Recent CFO comments on earnings calls and announcements of new buyback programs suggest execution of buybacks may continue at a picked-up pace.

Investment bank UBS, Kimberly-Clark, Wal-Mart all announced multi-billion-dollar share buybacks during the first two months of this year. Apple ($27 billion spent on buybacks in 2020) and Google still have substantial portions of buyback authorizations to spend, and Facebook’s board gave the nod to a $25 billion buyback program this quarter.

Retailer AutoZone restarted its buyback program in its recently closed fiscal second quarter, purchasing $900 million in shares.

“As we said last quarter, if we have concerns about the near term, we will simply temporarily suspend repurchases again,” CFO Jermane Jackson told analysts and investors. “But we feel comfortable with our strategy and our execution. We remain confident in our near-term plans and, as such, expect to continue reducing the level of cash and cash equivalents on hand through the remainder of this fiscal year.”

Even commercial real estate investor CBRE Group plans to jump back in, resuming its programmatic share repurchases, CFO Leah C. Stearns said on an earnings call. However, it intends to balance its capital deployment, she stressed.

“We’re going to focus on building out our capabilities internally, our M&A pipeline, which is sizable and robust,” Stearns said. “Using the buyback is a natural hurdle in comparison to the returns that we can achieve through M&A. It drives a level of discipline and instills that into our underwriting process.”

The problem CBRE, AutoZone, and other issuers face is that stock prices are up substantially from their pandemic lows. Richly valued shares make stock repurchases more expensive.

“We achieved basically a full year’s worth of buybacks in a relatively short period at an outstanding price point.” — Kieran McGrath, CFO, Avaya

According to investor Warren Buffett, management’s belief that the market is undervaluing its business should be a vital component of the motivation for returning capital to shareholders. Along that line of thinking, the smartest CFOs may have been the ones accumulating stock during the heights of the COVID-19 pandemic.

While other companies paused buybacks, Kieran McGrath, CFO of Avaya, accelerated Avaya’s in March 2020 when its share price dipped. The unified communications and contact center solution provider bought back 26% of its outstanding shares at $11.39 over six months. Its shares now trade in the $30 range.

“We knew the company was undervalued [and] that the crisis was having an unintended effect on many companies,” McGrath told CFO. “We achieved basically a full year’s worth of buybacks in a relatively short period at an outstanding price point.”

In a similar vein, Nomad Foods initiated a $300 million stock buyback at the onset of COVID-19 and was “quick to repurchase a significant amount of our stock under $17 per share,” said CEO Stéfan Descheemaeker on the frozen foods company’s February earnings call. Nomad’s shares have hovered near $25 per share in the last few months.

Besides a high-flying stock market, CFOs weighing share buybacks will be dealing with some Congressional leaders and a president who oppose this particular capital allocation choice. On Tuesday, Massachusetts Democrat Sen. Elizabeth Warren called buybacks “paper manipulation” because, according to her, they come at the expense of reinvestment in businesses and workers.

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