S&P 500 buybacks appear to have picked up dramatically of late, according to strategists at Bank of America Merrill Lynch. Meanwhile, the firm’s clients have been unloading large chunks of U.S. stocks—a combination which makes it seem that S&P 500 firms are taking advantage of the recent broad-based pullback to buy back some of the shares.

S&P 500 climbs, but BAML clients sell

BAML Equity and Quant Strategists Jill Carey Hall and Savita Subramanian reported broad-based selling across the various client types in their March 15 update on their firm’s equity client flow trends. They noted that the S&P 500 climbed 1.1% last week but added that last week marked the seventh in a row in which BAML clients were net sellers of U.S. stocks, racking up $3.7 billion in net sales.

2

They said this was the most since September and that institutional clients dominated the sales, racking up net sales that were the second biggest since BAML started keeping data. Hedge funds and private clients also continued to be net sellers of U.S. stocks as last week marked the third consecutive week of selling for each client type.

ETFs see biggest net sales

Hall and Subramanian said the biggest net sales among their clients were in exchange-traded funds, although they also observed broad-based selling of single stocks in nine sectors. Financials and Health Care were the two most-sold sectors, they reported.

Looking at four-week average flows, which they note are not as volatile, just the Consumer Discretionary sector has a “long-term” net buying trend as it has seen inflows since the middle of January. The longest net selling trend goes to Staples and Technology. Staples has seen outflows since late January, while Technology has seen net sales since early last month.

The BAML team said institutional and private clients both sold stocks in nine sectors last week, with hedge funds’ net sales coming mainly in the Tech and Health Care sectors. They also report that hedge funds purchased stocks in five sectors and exchange-traded funds.

4

Sales came across all three size segments, but the most notable outflows came in mid-caps, as they said the selling of this size segment was the biggest since June 2009.

3

S&P 500 buybacks pick up dramatically

The BAML team said S&P 500 buybacks sped up again for the third week in a row, reaching their highest level in six months. They added that 500 buybacks are now at a higher level than they were precisely a year ago. Although the data on completed S&P 500 buybacks is reported on a lag, they say the general data on buybacks suggests that completed ones also climbed significantly.

1