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 […]
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 […]
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 […]
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 […]
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. […]
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, […]
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 […]
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 […]
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 […]
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 […]
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 […]
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. 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 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 […]
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 […]
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 […]
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.
SINGAPORE-BASED private equity firm Elite Partners Capital announced on Tuesday that Micheal Tan Hai Peng, executive director of property and construction group Ho Lee Group, has been appointed executive chairman.