Cash Is King

Michael Jamison, Portfolio Manager

September 30, 2020

Given the current economic climate – and companies’ inability to forecast far into the future – major corporations are conserving cash in efforts to ensure they can weather any impending economic uncertainties. According to data compiled by Bloomberg, “Holdings of cash and equivalent securities among companies in the S&P 500 Index increased 35% this year on a per-share basis.”


Access to cheap debt and an abundance of cash holdings has led many investors to ponder what corporate finance chiefs plan on doing with all of it. According to the Wall Street Journal, several businesses – such as Honeywell, Microsoft and Paypal – are looking to put their companies’ capital to work by seizing growth opportunities. “We absolutely want to go and deploy capital,” said Greg Lewis, chief financial officer of Honeywell International Inc. “This is truly an opportunity for us to go do that.” Other companies are using their cash to slowly reinstate their dividends and stock buyback programs. Last week, CNBC wrote that Accenture, Johnson Controls, Darden Restaurants, Foot Locker, Guess and Winnebago Industries were among those companies planning to use their cash to return more capital to shareholders. Either way, astute investors need to be dialed in with which corporations are stockpiling cash and how they intend to use it in the coming year.

Wall Street Journal

https://www.wsj.com/articles/after-stockpiling-cash-some-companies-are-looking-to-spend-11596706202?mod=flipboard


CNBC

https://www.cnbc.com/2020/09/25/these-companies-are-returning-money-to-shareholders-after-cutting-jobs.html


All material of opinion reflects the judgement of Adviser at this time and are subject to change. This material is not intended as an offer or solicitation to buy, hold or sell any financial instrument or investment advisory services.




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