Money and Finance
- The Truly Exceptional Business...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:The truly exceptional business can operate with little capital. When U.S. securities markets function normally, most healthy businesses have no trouble...
- An Insider’s View Of Capital Allocation
From csinvesting:The 58-page document will start with buy backs from a corporate finance (an insider’s) perspective as described by Mr. Louis Lowenstein, the CEO of Supermarkets General and a Law Professor at Columbia University. Then you will read...
- 5 Signs Of A Good Annual Report
Annual report season is upon us, which presents an opportunity to better understand our current portfolio holdings and watchlist ideas, as well as management's strategy and outlook. Here are five signs of a good annual report -- that is, one that...
- Book Review Of The Outsiders
I finally got around to reading William Thorndike's The Outsiders -- a sure classic that I've added to the "must read" section of my recommended books on investing. Looking through my Kindle copy of the book, I have 70 highlights and bookmarks,...
- Buybacks Aren't Doing Much For Shareholders Right Now
"If everyone is doing (buybacks), there must be something wrong with them." - Henry Singleton, former Teledyne CEO (profiled in The Outsiders) With the exception of 2009, gross buybacks have outpaced dividends paid by U.S. companies each year since...
Money and Finance
Capital Allocation: Evidence, Analytical Methods, and Assessment Guidance - by Michael Mauboussin and Dan Callahan
Link to paper: Capital Allocation: Evidence, Analytical Methods, and Assessment Guidance
- Capital allocation is a senior management team’s most fundamental responsibility. The problem is that many CEOs don’t know how to allocate capital effectively. The objective of capital allocation is to build long-term value per share.
- Capital allocation is always important but is especially pertinent today because return on invested capital is high, growth is modest, and corporate balance sheets in the U.S. have substantial cash.
- Internal financing represented almost 90 percent of the source of total capital for U.S. companies from 1980-2013.
- M&A, capital expenditures, and R&D are the largest uses of capital for operations, and companies now spend more on buybacks than dividends.
- This report discusses each use of capital, shows how to analyze that use, reviews the academic findings, and offers a near-term outlook.
- We provide a framework for assessing a company’s capital allocation skills, which includes examining past behaviors, understanding incentives, and considering the five principles of capital allocation.
- The Truly Exceptional Business...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:The truly exceptional business can operate with little capital. When U.S. securities markets function normally, most healthy businesses have no trouble...
- An Insider’s View Of Capital Allocation
From csinvesting:The 58-page document will start with buy backs from a corporate finance (an insider’s) perspective as described by Mr. Louis Lowenstein, the CEO of Supermarkets General and a Law Professor at Columbia University. Then you will read...
- 5 Signs Of A Good Annual Report
Annual report season is upon us, which presents an opportunity to better understand our current portfolio holdings and watchlist ideas, as well as management's strategy and outlook. Here are five signs of a good annual report -- that is, one that...
- Book Review Of The Outsiders
I finally got around to reading William Thorndike's The Outsiders -- a sure classic that I've added to the "must read" section of my recommended books on investing. Looking through my Kindle copy of the book, I have 70 highlights and bookmarks,...
- Buybacks Aren't Doing Much For Shareholders Right Now
"If everyone is doing (buybacks), there must be something wrong with them." - Henry Singleton, former Teledyne CEO (profiled in The Outsiders) With the exception of 2009, gross buybacks have outpaced dividends paid by U.S. companies each year since...