SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Graham Osborn who wrote (58929)1/17/2017 9:25:51 AM
From: Micah Lance  Read Replies (1) of 78651
 
If you are going to adjust book value, then you need to include adding back treasury stock in an instance like this. This will give a better picture of the capital structure as mentioned in "Buffett and the interpretation of financial statements".

I don't see how negative equity matters much in this instance. If you were concerned about a company going bankrupt, then certainly negative equity would matter but MCO has sufficient working capital and has substantial interest coverage on their outstanding debt so a default/bankruptcy isn't much of a concern here.

In this case, you have MCO generating a lot of cash so they have to deploy it somewhere. As Paul mentioned, there isn't much in the way of PP&E to maintain or expand and they could use it for acquisitions here and there, which it seems they may have done. So the only things left really are increasing dividends and buying back stock, which they have done both increasingly over the past few years.

Essentially over the past few years, MCO has reduced outstanding shares and increased dividends on the remaining shares outstanding. Both seem valuable to shareholders to me. As far as I can tell this is a classic Buffett situation which is backed up by the fact that he owns 12.9% of the company.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News