Lots of Cash = Bad??
Fund Managers provide valuable insight to us laymen investors. Business Insider published comments from Bill Smead of Smead Capital Management with such insight as this:
The “bulbous” cash piles held by Apple and other large tech companies makes them a poor investment
The story goes on:
Smead said his firm had conducted significant research into the tech sector over the last six months and reached “the conclusion that tech is where cash goes to die.”
6 months worth of research!
Academic studies had found that massively over-capitalized companies performed as badly as those that are undercapitalized, Smead said.
So, on average, companies with lots of money (mentioned were Apple, Google, and Microsoft) perform no better or worse than those companies with very little money. That’s an interesting conclusion, since unless the companies were gifted tens of billions of dollars, they must have performed pretty well to have those cash reserves.
Lots of money = Bad. Gotcha. Thanks Bill Smead! You should check out the article, though, as there was more valuable information on the dangers of owning stocks with a dependency on China.