Some companies are very good at managing their working capital. Among the best are PepsiCo, HP, and Lennar. Each year from 2011 to 2018, those companies are part of an elite few that have improved their cash conversion cycle each year. The Wall Street Journal's Mark Mauerer explains further, writing: The top-performing companies paid suppliers almost three weeks slower in 2018 than typical companies and collected cash from customers almost three weeks quicker—while holding less than half the inventory, data showed. The amount of funds trapped in inventory fell for the first time since 2012 … [Read more...]

Value stocks are trading at their steepest discounts to the market in history. Chris Matthews reports for MarketWatch: That’s according to an analysis by J.P. Morgan’s chief U.S. equity strategist, Dubravko Lakos-Bujas, who wrote in a Thursday note to clients that “value is currently trading at the biggest discount ever, and offers the largest premium over the last 30 years.” Value investing is a strategy whereby investors look for stocks that are underpriced relative to a fundamental analysis of the companies worth, and one that was made famous by Berkshire Hathaway chief executive Warren … [Read more...]

In the Financial Times, Aswath Damodaran explains why investors should be skeptical of stock based compensation. The use of stock based compensation is growing among public companies, and is especially prolific in the tech industry.  Damodaran writes: As an investor, the two words that you should dread the most in a financial statement are “adjusted earnings”, as companies take accounting earnings and tweak them for sundry items. In the process, they almost always turn big losses into smaller ones, and losses into profits. One adjustment that is consistently made to get to adjusted … [Read more...]

Disney has signed a deal with Comcast to take full control of Hulu. The company had shared control with Fox, AT&T (which acquired a small Hulu stake when it bought Time Warner) and Comcast (which gained its share after purchasing NBC). After it acquired Fox, Disney held the majority of the streaming service. Then AT&T also agreed to sell its smaller share in April. With Hulu under its control, and its Disney+ streaming service debuting in November, Disney can now escalate its competition with Netflix. Bloomberg's Gerry Smith and Lucas Shaw report: Hulu will be a key weapon in … [Read more...]

Stamps.com was a major winner during the momentum-fueled market that has dominated since 2013. The stock was among the 20 best performers in the Russell 3000 Index (top 3,000 U.S. companies ranked by market capitalization) when it hit an all-time high in June of last year. Today, shareholders are likely weeping. The stock is indicated to open at $44.50—a 50% haircut from yesterday and a portfolio-decimating 84% below its high of last year. Turns out Stamps.com's business was pretty reliant on some exclusive contracts with the U.S. Postal Service that were terminated earlier this year. We … [Read more...]

Stock market legend Jeremy Grantham has predicted that over the next 20 years, the stock market will break a lot of hearts. Mark Decambre of MarketWatch writes: Jeremy Grantham, an investor credited with predicting the 2000 and 2008 downturns, told CNBC on Thursday that investors should get inured to lackluster returns in the stock market for the next two decades, after a century of handsome gains. “In the last 100 years, we’re used to delivering perhaps 6%,” but the U.S. market will be delivering real returns of about 2% or 3% on average over next 20 years, the value investor and … [Read more...]

With profits racing ahead of economic growth in America, Mike Bird of The Wall Street Journal suggests replicating recent American stock market success will be difficult. He writes: The S&P 500 is back at a new record high, while stocks in most of the rest of the world are yet to return to 2018’s peaks. But the rampant outperformance of U.S. equities can’t last forever. Low interest rates and eye-watering valuations have been credited with driving the U.S. bull market, but financial conditions haven’t been so different elsewhere. The big reason why U.S. stocks have beaten those in … [Read more...]

So far in April, half of the gains generated by the Nasdaq 100 were produced by the stocks from just four companies, Apple, Amazon, Microsoft and Facebook. The equal weight version of the index has been in decline. That implies relative weakness in the overall index, masked by strength in a few very large companies. Vildana Hajric and Sarah Ponczek report for Bloomberg: The Nasdaq 100 is on a tear, hitting record after record. But the upward push is being driven by just a handful of familiar names, with four adding half its gains this month. Apple Inc., Amazon.com Inc., Microsoft Corp. and … [Read more...]

After many delays and false starts, it seems as though the big media companies are finally prepared to offer Netflix some real competition. Disney now owns 60% of Hulu, and could soon own more. Hulu has purchased AT&T's 9.5% share (acquired when the telecom purchased Time Warner). Now Disney and Comcast, the only two large remaining owners of Hulu will have to negotiate on how much of the purchase each receives. Disney is preparing to use Hulu as the counterpart to its family streaming offering, Disney+. Hulu will host shows with more adult themes. Meanwhile, AT&T is preparing its own … [Read more...]