Apple record share buy back indicates belief of investors undervaluation by investors

That fact that Apple is still buying back shares–at a pace even faster than before–indicates that it still thinks it is dramatically undervalued by investors.

Apple spent an astounding $23.5 billion on stock repurchase, more than twice its recent pace.

Since 2012, Apple has spent a total of $199.6 billion in share buybacks. Over the past two and a half years, it has paid between $6 and $11 billion per quarter on both open market and Accelerated Share Repurchase programs to buy its back stock.

In the most recent quarter, however, Apple spent an astounding $23.5 billion on stock repurchase, more than twice its recent pace, said Apple Insider.

Apple’s $23.5 billion stock repurchase–in a single quarter–is nearly 8 times the size of its largest-ever acquisition (Beats) and more than twice the size of Google’s acquisition of Motorola Mobility.

It’s close to the IPO valuation of Spotify or Microsoft’s massive acquisition of LinkedIn–albeit was quietly performed without any lengthy regulatory approvals or the layoffs of redundant talent. And unlike Beats, Motorola, Spotify or LinkedIn, Apple’s acquisition target is actually profitable.

Apple’s buybacks are not only reducing its outstanding share count but are also erasing the doubters among its shareholders, effectively reducing the volatility in its share price.

Despite massive buybacks, Apple still has a huge pile of cash for global investment

Due to tax laws, Apple has been using much of its domestic U.S. cash flow to finance stock buybacks and dividend payments. To tap into its foreign earnings, it also began issuing bonds at extremely low interest rates around the world. It no longer needs to do this. 

The company currently holds $267 billion in cash reserves overseas and $122 billion in total debt. Subtracted from cash holdings, this means Apple has $145 billion in liquid assets apart from the more than $10 billion in free cash flow it generates every quarter.

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