General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
Thanks, Ed! My experience with reader comments on GE to-date suggests that a large majority favor full restoration of the dividend before or at least at a higher proportion to buybacks. Obviously without commensurate earnings, the dividend still cannot be fully restored, but analyst estimates (who knows how accurate they are) indicate we will be poised within a couple of years. Immelt is right in theory to want to reduce share count, but I believe it favors himself and other executives and directors (excessive compensation is another serious issue at GE, one which I've written about rather extensively), while there's also the matter of GE's buyback track record being highly destructive as I show in the article. It's a shame the Reuters and other journalists don't read more widely.
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
markb, good point re Immelt's likely preferences. Interestingly, GE continually reports in its proxies that Immelt has never sold a share that he has received by way of option exercise. So one would guess he prefers a higher dividend, too. However, it's a no brainer that the biggest upside lies in stock options, thus necessitating the buybacks. How much is enough? I wouldn't be so concerned if the payoffs weren't so one-sided. E.g. CEO-median work pay is approximately 300:1; named executive accumulated pensions of $12M-$37M are rarely reported in the media, but continue to accrue while the same earn multi-million annual compensation.
Dick Bove says U.S. banks' stocks may fall another 10%-12% to reflect market fears about European debt and new regulations which he says will lower the earnings capacity of the industry by 25%. However, he believes bank stocks are still "very attractive" investments and would "grow in multiples, not percentages." [View news story]
Grow in multiples, no percentages -- here's how: rip off existing customers in other ways, rip off new customers overseas; more reason than ever to use a credit union. Per the article: "Banks could employ a number of strategies to combat the new regulations, including cutting costs; eliminating free products and stop forgiving fees; employing new charges such as monthly maintenance fees for accounts; entering new arenas such as payday loans to develop new products; and broadening their capital markets outside US borders to where regulation is less stringent."
You go, girls! Sixteen women heading S&P 500 firms averaged earnings of $14.2M in their latest fiscal years, 43% more than the male average, a Bloomberg study finds. Big winners: Carol Bartz (YHOO), $47.2M and Irene Rosenfeld (KFT), $26.3M. "When you see numbers like this, one can truly say that the glass ceiling in corporate America has been shattered." [View news story]
The pay of Carol Bartz in particular is very disturbing in both absolute terms and in relation to how Yahoo!'s stock has performed since she became CEO. So much for the board of directors and compensation committee looking after shareholder interests.
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
menasian, agreed -- imagine if GE paid out increasingly (incrementally) more as a percent of earnings (not unreasonable or excessively risky given improved b/s with large cash pile and robust Op CFs), its yield would attract more investors at both the institutional and retail level so-called starved for yield in this time of suppressed interest rates. For example, compared to $0.60/sh at present, an annual pay out of $0.76/sh (meaning a hike of 4 cents each successive quarter) would put the yield at the current stock price at 3.9% and payout/EPS at 63%. Meantime we're expecting further EPS growth. So a 4% yield, as another commenter referenced above, is well within reach.
Higher payouts resulting in a higher stock price would make buybacks more costly, but it doesn't seem that the stock price is going to skyrocket as result of one or the other (talking up buybacks clearly hasn't set the price off). There is time to buyback stock, curb excessive equity grants, and pay more attention to the dividend. In the "end", executives may not have as many millions, but it ought to be more favorable for "all" shareholders with fewer shares out and higher dividends.
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
turks4, thanks for your comment. Indeed, as evidenced by Immelt's desire for buybacks to reduce share count, in addition for instance per GE's proxy statement for its Annual Meeting held last month (in which two shareholder proposals argued against pay practices, including dubiously timed, priced and amount awarded of options to executives, and one concerning a clawback), it is clear that management comes first. Can we blame executives for taking advantage of a system heavily skewed in their favor? We can certainly be upset by such things as the above, the fact that bonuses were paid to all named executives (ex-Immelt) even during the financial crisis, that they have massive accumulated pensions ranging from $12M-$37M each, etc ad nauseum.
Some are taking the Lehman collapse anniversary as a time to go super-bullish. The Dow returning to 14,000, Jon Markman? "In three years? Not a problem. The signs are abundant, if you know where to look: in the corporate credit markets, in employment trends, in consumer credit trends, in government statements and in corporate revenue trends." [View news story]
Sounds like Mr. Markman is selling the Kool-Aid: [paraphrasing] sentiment surveys out the window (little guys have too little money); big money (read bearish hedgies) doesn't mean 'smart' money, so expect a massive short squeeze; and some companies raised their estimates by a few pennies. Get ready for Dow 14,000, in three years. Wait a minute, isn't he writing to an audience basically of little people (asset-wise).
Japanese Lesson for U.S.: Demographics Matter a Lot [View article]
This article is kind of amusing if you think about it: blaming the Nikkei and JP real estate busts on demographics. Fair enough, if it's a case of not being able to sell (an already overvalued asset) at a higher price to someone of lesser common sense or none at all. However, had you said that demographics became a factor post-crash, then I'd agree completely because it goes without saying that doom/gloom permeated throughout Japan, crimping not only consumption, but also "conception."
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
tech46, it will be interesting to see how the situation with GE plays out. Dividend yield is 3.1%, at 52wk high (about 10% above current stock price) its just under 2.8%; dividend as percent of EPS is 50%; current dividend payout vs pre-cash peak is just under 50%; there is much more room vs. operating cash flows especially considering Immelt has said his focus is more on deal integration rather than new dealmaking. There's enough cash and cash flow to go around, but I worry of bias for, and destructive track record of, buybacks.
Japanese Investors Saying 'No Thanks' to Government Bonds [View article]
Donald, while there are of course are other factors, the bottom line is that the yield is so paltry as to dissuade Japanese individual investors who have been earning even less on cash deposits and suffering in a deflationary environment to boot. Also, don't miss the fact that the Japanese savings rate may be down, but the Japanese have a tremendous amount of accumulated savings.
On Nov 05 12:24 PM Donald Ingram wrote:
> Other factors are to be considered besides low returns; > 1/ An aging work force. > 2/ A much lower savings rate. > 3/ High unemployment. > 4/ Collapsing export market. > 5/ Diminished tax returns. > 6/ Crushing social obligations. > 7/ New, inexperienced government. > > To put forward your reasoning as just the poor rate of return, vis > a vis the low interest rate, is to ignore the above mitigating factors.
Japanese Equities: Land of the Relatively Rising Sun [View article]
Don, good article, and no doubt that EWJ has size and liquidity. Ironically, as I published recently (available on SA by searching ticker EWJ or my website at steventowns.com for those interested), its size and liquidity are exactly what did it in, or more precisely, what did in the Japanese equity market. The massive deleveraging last autumn handily took the N225 to a 26-year low. And relative yen strength has basically been the coup de grace for Japanese equities. I am not too excited about investment funds that are in the red but outperforming relatively. And in this case, any significant recovery for EWJ would necessitate a weaker yen, which would impact the fund's returns. I would be more interested in cherry picking some of EWJ holdings for accumulation and dividend reinvesting.
Thank you, CEDUP; agreed. Will be really interesting to see how capital allocation decisions are made once GE Capital begins repaying dividend to parent. But I'm prepared to be underwhelmed given the unbridled support of buybacks and good chance of more dilution per the proposal in this year's proxy! Doesn't me "we" give up though. More to come....
"We have sold everything we can produce in silver and have demand for at least twice that volume," says the head of sales at the Royal Canadian Mint. Silver surges another 1.9% to $32.16/oz., even as news floats of an impending margin hike. Next stop: Hunt Brothers. SLV +1.0%. [View news story]
That should be $32.16 per "oz" not "lb." Anyway, margin hikes seem to hit price for day or two tops. Prudent perhaps, but previous ones were announced w/o warning and cause of unnecessary volatility. Dubious origin imho. Not sure it makes sense to invoke Hunt Brothers at current price level and circumstances (demand for physical!).
Business investment, not Fed easing or government stimulus, drives job creation, FedEx (FDX) CEO Fred Smith says. “Private business investment today is down about 8% from its peak a couple of years ago. If you cannot get business investment up, [you] will not create jobs." China is "roaring ahead," Smith adds, and international express business is strong. [View news story]
I don't disagree w/ that, but what's up w/ this (see below) from FDX's most-recent earnings release about a month ago? And I don't disagree w/ streamlining operations either; but it's not readily clear if or how much FDX is investing in its business nor how much job creation, if any, it can be credited.
FedEx Lifts FY11 View After Strong Quarterly Earnings; To Cut 1,700 Jobs
In addition, Memphis, Tennessee-based FedEx said it will combine its FedEx Freight and FedEx National LTL operations effective January 30, which would result in about 1,700 job cuts, and closing of about 100 facilities.
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
Dick Bove says U.S. banks' stocks may fall another 10%-12% to reflect market fears about European debt and new regulations which he says will lower the earnings capacity of the industry by 25%. However, he believes bank stocks are still "very attractive" investments and would "grow in multiples, not percentages." [View news story]
You go, girls! Sixteen women heading S&P 500 firms averaged earnings of $14.2M in their latest fiscal years, 43% more than the male average, a Bloomberg study finds. Big winners: Carol Bartz (YHOO), $47.2M and Irene Rosenfeld (KFT), $26.3M. "When you see numbers like this, one can truly say that the glass ceiling in corporate America has been shattered." [View news story]
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
Higher payouts resulting in a higher stock price would make buybacks more costly, but it doesn't seem that the stock price is going to skyrocket as result of one or the other (talking up buybacks clearly hasn't set the price off). There is time to buyback stock, curb excessive equity grants, and pay more attention to the dividend. In the "end", executives may not have as many millions, but it ought to be more favorable for "all" shareholders with fewer shares out and higher dividends.
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
Some are taking the Lehman collapse anniversary as a time to go super-bullish. The Dow returning to 14,000, Jon Markman? "In three years? Not a problem. The signs are abundant, if you know where to look: in the corporate credit markets, in employment trends, in consumer credit trends, in government statements and in corporate revenue trends." [View news story]
Japanese Lesson for U.S.: Demographics Matter a Lot [View article]
General Electric: Eschew the Buybacks, Hike the Dividend More Meaningfully [View article]
Japanese Investors Saying 'No Thanks' to Government Bonds [View article]
On Nov 05 12:24 PM Donald Ingram wrote:
> Other factors are to be considered besides low returns;
> 1/ An aging work force.
> 2/ A much lower savings rate.
> 3/ High unemployment.
> 4/ Collapsing export market.
> 5/ Diminished tax returns.
> 6/ Crushing social obligations.
> 7/ New, inexperienced government.
>
> To put forward your reasoning as just the poor rate of return, vis
> a vis the low interest rate, is to ignore the above mitigating factors.
Japanese Equities: Land of the Relatively Rising Sun [View article]
GE's 2012 Proxy: Pleasing Performance? [View article]
"We have sold everything we can produce in silver and have demand for at least twice that volume," says the head of sales at the Royal Canadian Mint. Silver surges another 1.9% to $32.16/oz., even as news floats of an impending margin hike. Next stop: Hunt Brothers. SLV +1.0%. [View news story]
Business investment, not Fed easing or government stimulus, drives job creation, FedEx (FDX) CEO Fred Smith says. “Private business investment today is down about 8% from its peak a couple of years ago. If you cannot get business investment up, [you] will not create jobs." China is "roaring ahead," Smith adds, and international express business is strong. [View news story]
FedEx Lifts FY11 View After Strong Quarterly Earnings; To Cut 1,700 Jobs
In addition, Memphis, Tennessee-based FedEx said it will combine its FedEx Freight and FedEx National LTL operations effective January 30, which would result in about 1,700 job cuts, and closing of about 100 facilities.
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