Dear readers,
You may recall my mentioning that I was going to Alaska to view the splendors of Nature and watch the ice melt. That time is upon us.
Aside from the fact that it might do me some good to learn how to take a vacation, Internet access is very limited in Alaska if you are passing through. Readers in that great state advised me that every public library offers free Internet, but that seems to underscore the notion that I should get with the program and do without while I am there. I am completely off the grid August 3-10, and posting only on a limited basis now through August 3 and August 11.
Some very able readers responded to my calls for guest bloggers. In fact, I had to turn some very talented people down for now, in part because I wanted to give first dibs to people who have helped out in various ways.
So I trust you have fun with the guest bloggers. You will hopefully find them a good mix of ideas, styles, and perspectives. In fact, I’m a bit worried you might find my return (back for real August 12) a letdown.
They are:
Cassandra of Cassandra Does Tokyo, who has, for the past 18 years, been an accidental, risk-averse, though reasonably profitable hedge fund manager, and who secretly wishes to do something more meaningful and interesting (provided it has nothing to do with professional sports, fashion, or ballroom dancing)
Paul Davis. based in New Zealand, is the founder and head of research of TechInvest, which runs three Australian-licensed funds, a global market neutral fund, a technology fund, and a global equity fund
Jim Fitch of the witty, pointed, and somewhat twisted Some Assembly Required
Scott Frew, Connecticut-based manager of hedge fund Rockingham Capital Partners who is thoughtful, discerning, and pretty plugged in
Lune, a neurosurgeon who has provided much in the way of thoughtful comments and (among other things) understands healthcare economics both via some formal training and having worked on Capitol Hill as a health policy fellow. However, he has volunteered not to write about that unless the news turns that way
Steve Waldman of the provocative economics blog Interfluidity, who not only has a trenchant writing style but also knows a thing or two about central banks
I have queued up daily Antidotes du Jour while I am away.
Have fun!
6 comments
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So welcome, y’all. It looks like a brain trust of practical experience to me, and I’m looking forward to many and various spins o’ the dial. And I promise to play nice! : )
Have fun in Alaska. It has only broken 69 degrees once in Anchorage this summer.
Yves,
Enjoy the holiday. Love the blog, and will miss you, but down time is precious, and should be savoured.
–Q
Yves,
** Don't feed the bears!
Now then, I thought she'd never leave…
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>> WTF about the issue of stock options impacting the valuation of stocks in regard to stock buybacks and the possibility that earnings per share (in general) are being "manipulated in some cleaver way" which allows cash to go to insiders, versus going to common shareholder dividends?
I know, this seems dumb, but can someone explain how maybe a trillion bucks here and there are vanishing, while EPS (in general) is not decreasing, and we also are not seeing much in the way of dividend cuts…but we are seeing a few CEOs cut loose with massive option grants.
I know these mysteries piss people off, but someone out there has to help out the small fry and take on these wild concepts, and since Yves is gone, maybe someone could help explain this to me in simple language, preferably in large bold type, lots of slang and a touch of profanity…
Re: "One other reason for a company to buy back its own stock is to reward holders of stock options. Option holders are hurt by dividend payments, since, typically, they are not eligible to receive them. A share buyback program may increase the value of remaining shares (if the buyback is executed when shares are underpriced); if so, option holders benefit. A dividend payment short term always decreases the value of shares after the payment, so, on the day shares go ex-dividend, option holders always lose. Finally, if the sellers into a corporate buyback are actually the option holders themselves, they may directly benefit from temporarily unrealistically favorable pricing."
That was from: http://en.wikipedia.org/wiki/Treasury_stock
LEveraged recap was perfected by Wall street as yet another malincented derivative of the rate environment. Issue cheap debt, buy back stock, wa la accretion. That said McKinsey has a fantastic study a while ago on share buyback and they cnclude as do most otheres that compnies are no better at timing the market than anyone else. The most prolific cash flowers tend to be slower growers (outside of tech of course, but they contend with option grants as an offset to repurchase) and hence tend over time to suffer multiple compression. That explains in some instances the accretion to EPS, if indeed there is accrection, but a lower valuation based nonethless. There is also the case of adverse selection. When said compony is doing well, cycliclaally, it tends to deploy that cash if a dearth of growth opps, to repurchase shares. iN other words pro cyclcical or not good. For a look at what can happen, pull up the charts of radio companies (ETM, CMLS, WON, EMMS). Repurchase is also a copout for returning cash to shareholders. It is a way of saying we are looking out for you but we don;t want to pay a divi becasue that is too sticky. Repurchase in a word is a typical Wall Street delight. Empowers the CEOs to maintain flexibility for all those value destoying M&A deals.
If entering the national parks up there I suggest taking the safety classes on how to deal with bears (the furry, quadruped kind). If you are going camping purchase one of the large fire-extinguisher sized cans of pepper spray.
If you roll up in a ball supposedly they won’t eat you. I personally would run like hell though.
Happy Vacation