Behind the Scenes, a Buyback Wave Builds

While the press moans, companies are soaking up supply of their own stock.
Publish date:

This column was originally published on RealMoney on Aug. 16 at 9:21 a.m. EDT. It's being republished as a bonus for readers.

Companies continue to take matters into their own hands as the media decide to pay no attention and accentuate the negatives. Turn to the Money section of the


Wednesday and you will see an advertisement for a tender for


(CA) - Get Report

. Turn to the next page, and it's an advertisement for an

International Paper

(IP) - Get Report


Get on the calls for


(DE) - Get Report


Home Depot

(HD) - Get Report

and you will hear about buybacks. Home Depot has bought 17% of its shares in the last year.

Go listen to the conference call of

Ingersoll Rand

(IR) - Get Report

. It's decided it is going to do its best to take in every share it can.

Time Warner


will reload when it has finished its colossal buyback.


(CMCSA) - Get Report

took advantage of the lull in its stock to shrink its float dramatically.

Right now these buybacks mean nothing. The press ignores them. The analysts ignore them.

One day they will matter, though. One day the $2 trillion will come in from the sidelines, and the managers who sat there and watched as stocks did nothing will find that the available supply is not what they thought. Remember, this is a supply-and-demand game, and there can be a limited amount of blue-chip supply if these buybacks persist, and they are going to.

More importantly, these are signs of belief, a belief that their stocks are just too cheap, given how well they are doing.

And who can blame them? Go read the coverage of Deere's quarter. You will see that Deere allegedly thinks that farm equipment is weakening and that the housing slowdown will hurt it. The latter is the same complaint I heard about Ingersoll Rand, which has about the same 10% exposure to housing that Deere has.

Deere did not say any of these things. Deere was quite optimistic, saying the exact opposite of its housing business, that it was strong, and portraying a positive spin on agriculture.

Doesn't matter.

But no wonder they are buying. They are looking at their numbers,


at the press reports of their numbers.

That's what matters.

At the time of publication, Cramer was long Ingersoll Rand.

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