The Dividend Dilemma: Payouts, Buybacks, or Neither?
+ Michael Mauboussin, Aswath Damodaran, Aileen Lee, Jon Gray, Marc Rowan, Ricky Sandler, Grant Williams, Ben Hunt & More!
“The typical experience of the speculator is one of temporary profit and ultimate loss.”
— Benjamin Graham
Research
Morgan Stanley - Measuring the Moat (76 pages)
Mauboussin’s latest report provides a framework for evaluating a company's moat by assessing the sustainability and magnitude of its value creation over time.
M&G Investments - Uncovering the rich tapestry of emerging markets (40 pages)
This emerging markets report covers India’s rapidly evolving equity market, whether China will remain an key investment story in the coming decade, America’s relevance to EM going forward, and more.
Elm Partners - Introducing P-CAPE: Incorporating the Dividend Payout Ratio Improves Investors’ Favorite Estimator of Stock Market Returns (7 pages)
The Cyclically-Adjusted Price Earnings ratio (CAPE) is used for estimating the long-term expected real return of the stock market. However, it doesn’t take account of the fact that, in general, companies don’t pay out all their earnings as dividends each year. This paper makes an adjustment to the CAPE ratio to account for just that.
Verdad - Buybacks for US, Dividends for EU (4 pages)
Verdad’s deep dive on shareholder yield finds it “does a relatively good job of spreading returns in a linear fashion, both in the US and abroad.”
Bonus Content
Is the best dividend strategy to avoid them altogether? Link
Professor Aswath Damodaran shares his take on the wisdom and madness of crowds in the context of the recent election and prediction markets. Link
Aileen Lee explains that in historical platform shifts, tech incumbents and the best funded startups initially benefited, but startups grew to match and surpass them later on. Link
Traders who got a peek at dozens of real Wall Street Journal front pages mostly couldn’t make money. Link
Altimiter’s Jamin Ball wrote about the misalignment of incentives in venture capital between GPs, LPs and founders. You can also listen to him discuss the post on This Week in Startups. Read; Listen
BlackStone’s Jon Gray discusses the evolution of the firm, lessons learned from deal making, and the state of the real estate market (35 minutes). Link
Podcasts
In Good Company - Apollo CEO: Private Markets, Investment Alpha and Risk Management: Rowan discusses discuss the shifting dynamics of public and private markets, emphasizing value-based strategies and the impact of geopolitical and economic trends. [11/13/2024 - 53 minutes] Apple | Spotify | YouTube
Capital Allocators: Ricky Sandler - Evolution of Long-Short Equity Investing: Sandler covers the evolution of long-short investing over the past three decades, how he’s adapted his investment process, and why he created investment products to meet the needs of allocators. [10/28/24- 65 minutes] Apple | Spotify | YouTube
Excess Returns: Making Sense of Markets in a Post Election World | Grant Williams and Ben Hunt: Williams and Hunt discuss how trust, or lack thereof, shapes both political and market narratives and how "number go up" has become the prevailing faith in markets. [11/14/24- 69 minutes] Apple | Spotify | YouTube
What Else Is Happening
Did you miss last week’s email?