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BlehBleh's avatar

Friendly neighborhood former bank regulator here:

It makes me laugh so hard to think about all the SMR conversations I had with CFOs and CEOs about simulating +400 bps interest rate shocks over 1 yr and the impact to their balance sheets only to hear "rates don't move like that anymore". Cursory looks at UBPRs tell a gruesome story. Next 5-10 years the wave of failures/consolidation will be interesting to watch

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BowTiedF'er's avatar

It is criminal that companies manage their capital poorly.

Share price way up and earnings up? Buy back shares

Share price down and cashflow bad? Issue shares

We know why (got to max out those RSUs & options when the going is good). But watching it happen in real time over and over is maddening.

One of our employers bought back a ton of cheap, long debt and was buying massive shares pre-Covid. Then stopped the buyback during Covid when stock was down 60%. And just put out a ton of debt at +5% of what it brought back. Destroying value on volatility.

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