Always good to read an informed rational assessment of the role of dividends, buybacks, acquisitions, and internal expansion in corporate capital allocation decisions. Corporate America would be much stronger if more CEOs made allocation decisions like Buffet, Singleton, et al. I wonder if it's a problem of incentives, knowledge/skill, regs/taxes, opportunity set, etc.
Always good to read an informed rational assessment of the role of dividends, buybacks, acquisitions, and internal expansion in corporate capital allocation decisions. Corporate America would be much stronger if more CEOs made allocation decisions like Buffet, Singleton, et al. I wonder if it's a problem of incentives, knowledge/skill, regs/taxes, opportunity set, etc.
Warren Buffett has often made the point that most managers of Fortune 500 companies rose through the ranks based on their operational expertise in the business and know comparatively little about capital allocation. The Washington Post is a good example of a company with a great operational CEO who needed Buffett's guidance on capital allocation. As a result, Washington Post repurchased a large amount of stock in the 1970s at very low prices against the advice of the rest of the board of directors and the "experts" they employed. I don't think the situation has changed much since then.
Always good to read an informed rational assessment of the role of dividends, buybacks, acquisitions, and internal expansion in corporate capital allocation decisions. Corporate America would be much stronger if more CEOs made allocation decisions like Buffet, Singleton, et al. I wonder if it's a problem of incentives, knowledge/skill, regs/taxes, opportunity set, etc.
Warren Buffett has often made the point that most managers of Fortune 500 companies rose through the ranks based on their operational expertise in the business and know comparatively little about capital allocation. The Washington Post is a good example of a company with a great operational CEO who needed Buffett's guidance on capital allocation. As a result, Washington Post repurchased a large amount of stock in the 1970s at very low prices against the advice of the rest of the board of directors and the "experts" they employed. I don't think the situation has changed much since then.