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April 24, 2019

RSS Aswath Damodaran’s Musings on Markets

  • 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, […]
  • January 2019 Data Update 6: Profitability and Value Creation! January 27, 2019
    In my last post, I looked at hurdle rates for companies, across industries and across regions, and argued that these hurdle rates represent benchmarks that companies have to beat, to create value. That said, many companies measure success using lower thresholds, with some arguing that making money (having positive profits) is good enough and others […]
  • January 2019 Data Update 5: Hurdle Rates and Costs of Financing January 24, 2019
    In the last post, I looked at how to measure risk from different perspectives, with the intent of bringing these risk measures into both corporate finance and valuation. In this post, I will close the circle by converting risk measures into hurdle rates, critical in corporate finance, since they drive whether companies should invest or […]
  • January 2019 Data Update 4: The Many Faces of Risk! January 21, 2019
    I think that all investors would buy into the precept that investing in equities comes with risk, but that is where the consensus seems to end. Everything else about risk is contested, starting with whether it is a good or a bad, whether it should be sought out or avoided, and how it should be […]

RSS Dr David Kass commentary

  • The Federal Reserve and Monetary Policy April 20, 2019
    Barron’s (April 19) published my Letter to the Editor on the Federal Reserve and monetary policy: To the Editor: Grant asks: “Has the decadelong experiment in interest-rate suppression yielded the expected net benefit?” He concludes that the answer is “no.” We disagree. Although one cannot run a controlled experiment to observe what would have occurred […]
  • The Risks and Rewards of Investing in IPO’s April 6, 2019
    I was interviewed by the University of Maryland about the risks and rewards of investing in IPO’s. IN A BIG YEAR FOR STOCK DEBUTS, INVESTORS BEWARE Apr 03, 2019 Finance SMITH BRAIN TRUST – Shares of Lyft were still sagging days after the ride-hailing service had its initial public offering on the New York Stock Exchange. And […]
  • 7 Highlights of Warren Buffett Interview on CNBC March 28, 2019
    Warren Buffett was interviewed by Becky Quick on CNBC today. The 7 highlights were: (1) On Lyft’s IPO: “Buying new offerings during hot periods in the market — I don’t think it’s anything the average person should think about at all.” (2) “It does look like the pace of increase in the economy has slowed down […]
  • The U.S. Treasury Yield Curve is Not Inverted March 23, 2019
    The U.S. Treasury yield curve is NOT inverted. The yield on the 3 month U.S. Treasury Bill is 2.44% and the yield on the 30 year U. S. Treasury Bond is 2.88%.  The U.S. Treasury yield curve is flat between 3 months and 10 years (2.44%), but upward sloping from 10 years to 30 years.
  • Recession Fears are Premature March 22, 2019
    Recession fears appear to be premature despite a flat yield curve (3 months vs. 10 Year Treasuries.)  All previous U.S. recessions since World War II were preceded by the Federal Reserve raising interest rates too far and too fast from much higher levels.  The Great Recession of 2007-2009 was also caused by subprime mortgages and […]
  • Will Warren Buffett Buy an Airline? March 22, 2019
    I am quoted in a Bloomberg article: “Buffett’s Course Reversal on Airlines Sparks Talk of Acquisition”. Last year, the famed investor said he wouldn’t rule out owning a carrier, prompting talk about which one he’d grab. “One of those airlines would certainly be affordable and do-able” if Berkshire wanted to buy, said David Kass, a professor of finance […]
  • Berkshire Hathaway Portfolio Investment, StoneCo Ltd., Up 20% in Extended Hours March 19, 2019
    StoneCo Ltd. (STNE), a financial technology company in Brazil, is up 20% in extended hours trading at $41.44 on higher than expected earnings. It is now 70% above the IPO price of $24 paid by Todd Combs of Berkshire Hathaway in October, 2018. StoneCo Ltd. is a financial technology company based in Brazil, the fourth-largest […]
  • Wharton Business Radio Interview on Kraft Heinz March 19, 2019
    On March 6, I was interviewed for about 30 minutes on Wharton Business Radio (SiriusXM 132) on issues at Kraft Heinz.
  • Berkshire Hathaway Vice Chairmen Greg Abel and Ajit Jain Each Received $18 million in Total Compensation in 2018 March 15, 2019
    In an SEC Filing today (Proxy Statement for Annual Meeting of Shareholders), Berkshire Hathaway revealed that Vice Chairmen Ajit Jain and Greg Abel each received $18 million in compensation in 2018.  In previous years, prior to their promotion to Vice Chairmen, their compensation had not been revealed.

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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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