Aegon N.V [AEG] Set for a Bullish Breakout As Share Buyback Program Starts

Aegon N.V [NYSE:AEG] is one interesting stock to watch today. Despite the low volumes and being range bound for weeks, the stock has the potential for a breakout soon.  Yesterday, the company started the repurchase of shares as had been announced on September 17th. At the time, the company announced that it would repurchase 59 million Euros of common stock in an effort to water down the impact of an earlier interim stock dividend.

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The company added that the repurchased shares would be held in a treasury, and would be used in future dividend payments. The repurchase program that started yesterday is expected to run until 2nd November. On top of that, the company stated that the shares would be repurchased at a maximum of the company’s daily volume average price all through the month of October. 

Stock buybacks usually have a positive effect on a stock as they create demand for a stock, thereby bidding up the price. For context, a big aspect to the Bull Run that happened after the 2008 financial crash was due to buyback programs.

A 2018 market analysis by Business Insider stated that between 2009 and 2018, S&P 500 companies bought back $4.4 trillion, with the most striking one being Apple, which bought back $226.6 billion shares. It was also one of the biggest gainers post-2008. On this basis, Aegon N.V investors, can expect the stock to enter a sustained bull run in the near future.

Speculators are also likely to play a role in driving up the stock both during, and after the buyback. That’s because of the high volatility in the market at the moment. The U.S is headed to an election and there is no clear frontrunner between two candidates with two different policy approaches.

This is keeping investors can could sustain market volatility for the next couple of months. The situation is made even more complex by the COVID-19 pandemic. Today, the markets are trending lower after the U.S president announced that he had tested positive for the virus. Since there is no solution to the pandemic at this point, markets are likely to remain on edge, and investors will keep running to stocks that offer a mix of stability and growth. With the buyback program, this stock offers a perfect mix of both. 

About AEGON N.V 

Aegon N.V is a pensions and assets management company. It provides health insurance, car insurance, among others. It is based at The Hague, the Netherlands.