September was a strong month on the buyback front as companies repurchased $68.1 billion worth of their own shares, CNBC reports. According to CNBC, Citigroup runs a proprietary screen for top buyback companies and that screen is up 36% this year. PKW is higher by almost 38%. Citi considers companies that have reduced share count by 5% over the past year and picks the largest 50 companies that fall into that category, CNBC reported.
To be eligible for inclusion in the NASDAQ US Buyback Achievers Index, PKW’s underlying index, companies must have repurchased at least 5% or more of its outstanding shares for the trailing 12 months, according to PowerShares, so the PowerShares and Citi criteria are similar. [Buyback ETF Outperforming Broader Market]
Citi’s screen turns up Seagate Technology (NYSE: STX), Comcast (NasdaqGM: CMCSA), DirecTV (NYSE: DTV), Pfizer (NYSE: PFE) and O’Reilly Automotive (NasdaqGM: ORLY) as the top-five buyback ideas. Consumer discretionary are most represented in the Citi buyback group followed by healthcare, financials and information technology, CNBC reported.
Of those stocks, only DirecTV is found among PKW’s top-10 holdings and the satellite TV provider is in the ETF’s tenth spot with a weight of almost 2.1%. Of the other four Citi repurchase ideas, only O’Reilly is found in PKW’s lineup and at a weight of less than 0.9%.
However, PKW does share one thing in common with the Citi buyback screen: Sector preferences. Consumer discretionary accounts for 34.3% of the ETF’s weight while financials, technology and health combine for another 48%.
PowerShares Buyback Achievers Portfolio
Tom Lydon’s clients own shares of QQQ.