Think that big acquisition and borrowing a bunch of dough was a good idea? Sometimes your good intentions can work against you. . .(PS A little Will Ferrell V-Day humor here – if anyone can find the video clip please let me know. . .)
Here is a link to a great new paper scheduled for publication later in the year by The Journal of Finance – “Asset Growth and the Cross-Section of Stock Returns” by Schill, Gulen, and Cooper. (Nod to SmartMoney article by Hough that brought it to my attention. He mentions NDAQ and BBY as a couple of stocks that pass the screen.)
Long time readers know that I am a fan of using payout yield over dividend yield, and this paper is even more encompassing. It basically says a decrease in total assets is good – things like dividends, buybacks, spinoffs, and paying down debt. Ominous signs for future stock performance – accquistions, share issuances, borrowing, and sitting on lots of cash.
We test for firm-level asset investment effects in returns by examining the cross-sectional relation between firm asset growth and subsequent stock returns. As a test variable, we use the year-on-year percentage change in total assets. Asset growth rates are strong predictors of future abnormal returns. Asset growth retains its forecasting ability even on large capitalization stocks, a subgroup of firms for which other documented predictors of the cross-section lose much of their predictive ability. When we compare asset growth rates with the previously documented determinants of the cross-section of returns (i.e., book-to-market ratios, firm capitalization, lagged returns, accruals, and other growth measures), we find that a firm’s annual asset growth rate emerges as an economically and statistically significant predictor of the cross-section of U.S. stock returns.
Investor Dashboards . This is an easy way to track the timing model (thanks to reader JW). Although it looks like they use BigCharts which I *don’t think* accounts for dividends and distributions correctly.
Lots of sound advice in Vanguard’s “We Believe” series:
Vanguard We Believe #1
Vanguard We Believe #2
Vanguard We Believe #3
Vanguard We Believe #4
Vanguard We Believe #5
Vanguard We Believe #6
Vanguard We Believe #7
Vanguard We Believe #8
Vanguard We Believe #9
As John Fitzgerald (also known as the “Worst Person in the World“) can vouch ,it is much harder to shield your personal life from public scrutiny with Web 2.0. I’d like to think I don’t need to hide anything (except maybe that BusinessWeek article my first day of my first job after college – I swear I never said that). Feel free to stop by my Facebook page here. But if you do have some skeletons to hide, there is always ReputationDefender:
ReputationDefender was created to defend you and your family’s good name on the Internet. Our goal is straightforward:
* To SEARCH out all information about you and/or your child on the Internet, wherever it may be, and present it to you in a clear report.
* To DESTROY, at your command, all inaccurate, inappropriate, hurtful, and slanderous information about you and/or your child using our proprietary in-house methodology.