Comments on: Welcome Guest Bloggers!

By: Anonymous

Anonymous — Fri, 01 Aug 2008 00:02:00 +0000

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

By: S

Thu, 31 Jul 2008 10:46:00 +0000

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.

By: doc holiday

doc holiday — Thu, 31 Jul 2008 07:03:00 +0000

Yves,

** Don't feed the bears!

Now then, I thought she'd never leave…

————–

>> 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

By: Quarrel

Quarrel — Thu, 31 Jul 2008 06:54:00 +0000

Yves,

Enjoy the holiday. Love the blog, and will miss you, but down time is precious, and should be savoured.

--Q

By: Anonymous

Anonymous — Thu, 31 Jul 2008 06:23:00 +0000

Have fun in Alaska. It has only broken 69 degrees once in Anchorage this summer.

By: Richard Kline

Richard Kline — Thu, 31 Jul 2008 06:13:00 +0000

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! : )