|
We love it. Time once again for the informed, sober debate about whether cash-rich companies should repurchase shares or increase dividends.
Most recently, Institutional Investor magazine weighs in, with a considered discussion of the merits of each. They report that a Standard & Poor's analysis supports buybacks. Conversely, Wal-Mart Stores likes a dividend, and increased theirs 21 percent in March of this year.
Many activist investors know, first-hand and the hard way, that the debate rather misses the point. Long-suffering shareholders watch in frustration as executives blithely misallocate, misspend, and just plain waste excess cash. We highlighted one last week, Rimage Corporation.
We've covered this recently: To us investors, it's not how, it's how much and when. Back in Institutional Investor, McKinsey (surprisingly for a corporate cheerleader) concurs: "...buybacks and dividends have an equal impact on share prices. What counts...is the amount of a company's cash flow distribution..."
We couldn't agree more.
|
| You can find other useful resources at the TAI website, including our research on "Effective Activism, on the Cheap", the new guide to proxy access, bibliography of academic research on the returns to activist investing, and our white paper with the basics on activism. |
