If Apple Inc.’s year had a theme, it was the year the company finally started to chip away at that colossal hoard of cash.
After a little nudging by activist investor Carl Icahn, Apple AAPL, +1.77% boosted its share-buyback program in April to $90 billion and increased the pace of capital returns. New data from FactSet show that Apple has been the biggest buyback spender of 2014 among the S&P 500, pouring more than $56 billion into the program on a trailing 12-month basis as of the end of the third quarter. That’s nearly three times the outlay of runner-up IBM Corp. IBM, +0.32% which spent $19.2 billion.
Apple bought back $17 billion in shares last quarter, a 240% year-over-year increase that marks the second-highest dollar amount spent on buybacks during a quarter by any individual company in the S&P 500 since 2005, when FactSet began tracking the data. It’s second only to Apple’s own record of $18.6 billion set in the first quarter as part of the same buyback program.
Morningstar analyst Brian Colello said that while it’s not all surprising the world’s most valuable company would top a list such as this given its enormous cash cushion, he said the buybacks have undoubtedly been a “big contributor” to the stock’s strong performance in 2014.
Adjusted for a 7-for-1 stock split earlier this year, shares of Apple have climbed more than 43% over the last 12 months. Since hitting a 52-week low back on Jan. 30, they have been on the march higher — flirting with all-time highs since September.
“It showed that management was confident in its upcoming product launches and helped to put a floor into the company’s valuation during times of skepticism,” said Colello.
Apple is the world’s most valuable company, with a $641.7 billion market cap, almost double the market valuations of the next companies on that list, Microsoft Corp. MSFT, -0.54% and Exxon Mobil Corp. XOM, -0.61% both valued around $377 billion.
In total, the S&P 500 companies spent an aggregate $143.4 billion on share repurchases last quarter and $567.2 billion on a trailing 12-month basis. Those figures represent 16% and 27% respective increases from the same periods last year and put Apple’s contribution at 11.8% and 8.1%, respectively.
Icahn’s insatiable appetite for returns, though, is rarely satisfied. The billionaire sent yet another letter to CEO Tim Cook in October saying the stock would be much higher if Apple spent a total of $100 billion on share repurchases. To provide perspective, that would represent 64% of Apple’s $155 billion in total cash, cash equivalents and marketable securities, as of its most recent 10Q filing.