4 ms·
"I didn't understand what was going on. We had more cash than it would take to buy back every share in the company and yet the stock kept going down." Obvious
by T_S_ 16y ago
"I didn't understand what was going on. We had more cash than it would take to buy back every share in the company and yet the stock kept going down."
Obvious exaggeration. How many companies have more cash than market cap? Only ones that owe the money to someone else and cannot use it to buy back their stock. That made me question the whole article.
- pmjordan 16y agoHow may companies have more cash than market cap? It doesn't seem that implausible after a stock market crash.
- philk 16y agoIt happens from time to time, mostly after market bubbles burst these days. It used[1] to happen a bit more often because information wasn't as readily available. [1] ie decades ago...
- jakarta 16y agoScreening for negative enterprise value (Market Cap + Debt - Cash) is pretty popular. There aren't a whole lot of stocks that have it, but you can usually find a handful based in the US. They are sort of an inefficiency. In one sense, you are buying a stock for less than the cash on balance sheet. You could come in and liquidate it, making a profit. On the other side, sometimes stocks trade at negative EV because management is doing some terrible things. Maybe they are burning through cash at an alarming rate. Sometimes an activist will come in and stop the cash burn. I would also like to add that you can find negative EV stocks abroad more readily. There was a period when these opportunities existed in Korea (I think around 2004). It was pretty amazing if you were an investor.