Equity Compass Portfolios & Products
Catalyst/EquityCompass
Share Buyback Strategy

Objective

Portfolio strategy to capture the short-term excess returns associated with share repurchase announcements

Highlights

Investing in buybacks presents an intriguing opportunity in today’s investment environment
  • Like cash dividends, stock buybacks can be a tangible method of delivering benefits to shareholders; given the current relatively strong financial condition of corporate balance sheets and depressed stock prices, stock buybacks are expected to remain a significant capital market activity
Unique Approach
  • The EquityCompass approach seeks to capture the short-term excess returns associated with share repurchase announcements; empirical studies show that this approach is much more reliable than those based on longer term outperformance or buyback completions
Actively managed to maintain the right risk/reward balance
  • Reconstituted and rebalanced monthly to seek to optimize exposure to drivers of excess return
  • Individual security exposure is controlled; index holds equal-weighted positions in an optimized number of stocks
  • Imposes size and liquidity constraints to reduce the bias to small-cap companies
  • Minimizing market impact is a major consideration during constitution and ongoing management

Investment Process

EquityCompass Share Buyback Index
Current Constituents