“Warren Buffett once wrote that value investing is like an inoculation--it either takes or it doesn’t--and when you explain to somebody what it is and how it works and why it works and show them the returns, either they get it or they don’t.”
-Seth Klarman of the Baupost Group
The following is my latest piece (in Scribd to preserve formatting) about the large amount of cash on the balance sheets of US corporations. Based on the number of proposed M&A deals announced recently, it appears that companies are starting to put their cash hoards to work. But, is this good news for shareholders? Given the dismal performance of many big mergers you will forgive me if I do not trust the majority of US CEOs to allocate capital in a way that is optimal for shareholders. For this reason and a number of others, it is our position at West Coast Asset Management that companies with huge net cash positions should begin returning cash to shareholders as opposed to letting it languish on their balance sheets.
A version of this article was posted on WCAM's website at: http://wcam.com/newsroom. If you are looking for a value-biased, long only manager for your assets, feel free to contact former TV star Andrew Firestone at afirestone@wcam.com to inquire about WCAM's investment philosophy.
As of February 2012, all future posts from The Inoculated Investor will appear at http://covestreetcapital.com/Blog/?cat=14. Please visit the site to subscribe to Cove Street Capital's blog.
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