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August 21, 2019

RSS Aswath Damodaran’s Musings on Markets

  • Country Risk: A Mid-year 2019 Update August 13, 2019
    One of the consequences of globalization is that investors, analysts and companies can no longer stay focused on just their domestic markets, but have to also understand the risks and opportunities elsewhere in the world. When developed market companies first embarked on the journey of expanding into emerging market growth economies, investors pushed up their […]
  • Meatless Future or Vegan Delusions? The Beyond Meat Valuation June 12, 2019
    In a big year for initial public offerings (IPOs), with Uber, Lyft, Pinterest and Zoom, to name just a few, already having gone public and more companies waiting in the wings, it is ironic that it is not a tech company, but a food company, Beyond Meat, that has managed to deliver the most dazzling […]
  • Tesla's Travails: Curfew for a Corporate Teenager? June 3, 2019
    It should come as no surprise to anyone that Tesla is back in the news, though it seems to be for all of the wrong reasons. From Musk's Twitter escapades with the SEC, to talk about electric lawn blowers to concerns about a debt death spiral, the company has managed, yet again, to get in […]
  • Uber's Coming out Party: Personal Mobility Pioneer or Car Service on Steroids? April 15, 2019
    After Lyft’s IPO on March 29, 2019, it was only a matter of time before Uber threw its hat in the public market ring, and on Friday, April 12, 2019, the company filed its prospectus. It is the first time that this company, which has been in the news more frequently in the last few […]
  • Lyft Off? The First Ride Sharing IPO! March 8, 2019
    Last week, Lyft became the first of the ride sharing companies to announce plans for an initial public officering, filing its prospectus. It is definitely not going to be the last, but its fate in the market will not only determine when Uber, Didi, Ola and GrabTaxi will test public markets, but what prices they […]
  • The Perils of Investing Idol Worship: The Kraft Heinz Lessons! February 27, 2019
    On February 22, Kraft Heinz shocked investors with a trifecta of bad news in its earnings report: sub-par operating results, a mention of accounting irregularities and a massive impairment of goodwill, and followed up by cutting dividends per share almost 40%. Investors in the company reacted by selling their shares, causing the stock price to […]
  • January 2019 Data Update 9: The Pricing Game February 22, 2019
    In my last eight posts, I looked at aspects of corporate behavior from investments to financing to dividend policy, using the data that I collected at the start of 2019, to examine what companies share in common, and what makes them different. In summary, I found that the rise in risk premiums in both equity […]
  • January 2019 Data Update 8: Dividends and Buybacks - Fact and Fiction February 8, 2019
    In my series of data posts, I had always planned to get to dividends and buybacks, the two mechanisms that companies have for returning cash to stockholders, at this point, but an op ed on buybacks by Senators Schumer and Sanders this week, in the New York Times, will undoubtedly make this post seem reactive. […]
  • January 2019 Data Update 7: Debt, neither poison nor nectar! February 5, 2019
    Debt is a hot button issue, viewed as destructive to businesses by some at one end of the spectrum and an easy value creator by some at the other. The truth, as is usually the case, falls in the middle. In this post, I will look not only at how debt loads vary across companies, […]

RSS Dr David Kass commentary

  • 8 Highlights of David Rubenstein on CNBC August 16, 2019
    David Rubenstein was interviewed on CNBC this morning.  These are the highlights: (1) We can have a deal with China within 4 months (by December 15?). (2) We had an inverted yield curve for “10 minutes”.  In 2007 we had an inverted yield curve for 3 months. Recessions follow inverted yield curves by 300 – […]
  • Berkshire Hathaway Added to its Stake in Amazon during the Second Quarter August 14, 2019
    In an SEC 13F filing released after the market closed today, Berkshire Hathaway revealed an 11% increase ($100 million) in its stake in Amazon during the second quarter of 2019.  This stake is now valued at about $1 billion.  (Todd Combs or Ted Weschler) No other major changes were made to Berkshire’s portfolio during the […]
  • Does an Inverted Yield Curve Lead to a Recession? August 14, 2019
    I am quoted in The Washington Post on whether an inverted yield curve signals an upcoming recession. David Kass, a finance professor at the University of Maryland, cautioned that the yield curve may not be an accurate predictor of a recession under current conditions. Kass said several recessions in the past few decades have been […]
  • How to Survive in Volatile Markets: Go Live Your Life August 9, 2019
    I am quoted in the Washington Post: “The Dow Jones industrial average, if one goes back to its inception in 1896 and up to the present, has earned 5.6 percent per year on the capital gains of the stocks,” said David Kass, professor of finance at the University of Maryland. Kass then added another important […]
  • Comment on Trade Wars August 5, 2019
    Every U.S. recession since World War II was preceded by the Federal Reserve raising interest rates too far, too fast, from much higher levels than those of today.  The Great Recession of 2007-09 was also caused by too much debt in the housing sector. However, we have not had a trade war since the 1930’s […]
  • 5 Highlights of Berkshire Hathaway’s Second Quarter Report August 3, 2019
    Berkshire Hathaway released its second quarter earnings report this morning. The highlights were: (1) Berkshire Hathaway’s operating earnings declined by 11% during the second quarter, primarily as a result of a 63% decline from insurance underwriting. (2) Berkshire’s cash position increased to $122 billion from $114 billion at the end of the first quarter. (3) Berkshire […]
  • Berkshire Hathaway’s Stake in Bank of America Exceeds 10% July 27, 2019
    In an SEC Form 3 filing last night, Berkshire Hathaway disclosed that it owned 950 million shares of Bank of America as of July 17.  This stake is currently valued at $29 billion, which is Berkshire’s second largest common stock holding behind its $50 billion stake in Apple. This represents an increase of $1.5 billion […]
  • Commentary on the Gold Standard July 17, 2019
    The Wall Street Journal published my letter to the editor which disagrees with James Grant’s (“The Fed Could Use a Golden Rule”, op-ed, July 12) recommendation for the Federal Reserve to re-introduce a gold standard. The U.S. began to recover from the Great Depression of the 1930s when President Franklin D. Roosevelt cut the dollar’s ties with […]
  • Investing in the S&P 500 Index July 16, 2019
    I am quoted in U.S. News & World Report: “How to Invest in the S&P 500 at All-Time Highs”  “Since the outlook for the U.S. economy over the next few years is good with GDP projected to grow at 2% or higher, interest rates expected to remain near historically low levels and corporate profits expected […]

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Repurchase program

Share repurchases: What is smart at one price is stupid at another

April 26, 2018

Discussions about share repurchases often become heated in the investment world. But, in the words of Berkshire Hathaway chairman Warren Buffett,  assessing the desirability of repurchases isn’t that complicated. “From the standpoint of exiting shareholders, repurchases are always a plus. Though the day-to-day impact of these purchases is usually minuscule, it’s always better for a

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Berkshire Hathaway repurchase program

December 6, 2014

In a September 26, 2011, news release, Berkshire Hathaway announced, to the surprise of many, a program to repurchase Class A and Class B shares of Berkshire. Here is an insight into Warren Buffett’s thinking about share repurchase. In his annual letter (March 1, 2000) to Berkshire Hathaway shareholders for Year 1999, he said, among

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Warren Buffett on retained earnings and repurchase program

December 5, 2014

Berkshire Hathaway’s belief in retaining earnings as a way to strengthen its business can be seen in this excerpt from Warren Buffett’s letter to shareholders (February 26, 2011) for Year 2010: “Furthermore, not a dime of cash has left Berkshire for dividends or share repurchases during the past 40 years. Instead, we have retained all

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