The buybacks, though, did help support gains but only in the short-term as buyback momentum has ended badly before. The last top in buybacks was in the third quarter of 2007, which ended in a bear market. During 2007, PKW underperformed the S&P 500, partly due to the excessive buybacks that boosted earnings without a mind toward growth.

Alternatively, investors can take a look at the recently launched Elkhorn S&P 500 Capital Expenditures Portfolio (NasdaqGM: CAPX), which takes the top 100 S&P 500 companies based on efficient capital expenditure, to track U.S. firms that have reinvested their money toward meaningful growth and innovation. [An ETF That Larry Fink Would Love]

PowerShares Buyback Achievers Portfolio

For more information on stock buybacks, visit our buyback category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own shares of TTFS.

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