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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Jurgis Bekepuris who wrote (33861)	3/19/2009 1:33:16 AM
From: Spekulatius	Read Replies (1) \| Respond to of 78752

re Pension cost - the metric of this study (total liability/ market cap in %) is not that meaningful. The better metric would be shortfall/market cap. By the later mostly union shops (utilities, aerospace, defense) and even worse car companies and suppliers (GM,F, GT etc.) and truckers are the most vulnerable.For some truckers the pension shortfall exceeds the market cap. Even BA mentions in their 10k that tangible equity after the pension shortfall is negative.

To: Jurgis Bekepuris who wrote (33861)	3/19/2009 11:57:43 AM
From: E_K_S	Read Replies (1) \| Respond to of 78752

Hi Jurgis - I think the article that Spekulatius posted overstates the actual shortfall. Here is another site that provides a slightly different view of their liability and shortfall. I was surprised to see that the "actual" shortfall was that small ($ millions rather than $100 of millions). Look at the % Assets/Liability calculation. From the Web Site - Your Pension Health "...We analyzed Form 5500 data for the 20 largest single employer plans (company plans) and the 16 largest multiemployer plans (union plans), as listed by a major financial magazine....". knowyourpension.org Their data is lagging, so based on the S&P 500 decline YTD, the actual value of Total Assets might be lower than the amount reflected in their table. I think that pension liabilities are something to watch for the future but their shortfall might be overstated especially if the S%P 500 reverts back to it's mean long term value and growth rate. It's possible that we could see some one time payments by a few of the companies with shortfalls. A one time expense might impact earning but not significantly enough to tank the company's per share stock price (ie. greater than 20%). EKS