Posted By RichC on February 25, 2014
As the financial markets continue to flirt with record levels again, insiders are looking at where cash is being put to use, or not. Fox Business mentioned this morning that analyst expect much of the sideline cash to head towards R & D even as mergers and acquisition deals are garnering most of the headlines (ie. $19B Facebook/Whatsapp deal).
Although investors appreciate well manage companies with strong balance sheets, they also want to know that their investment is “working.” When companies sit for years on piles of cash, one wonders if management has an appropriate plan to continue growing? Berkshire Hathaway is probably not in the same boat with the other big five cash rich companies since they primarily buy good companies at good prices, at least that has proven to have been their track record, so I’ll exclude them from criticism … but the other four are focused on improving and selling products and services. When they sit on their hands, one wonders if Apple, GE, Microsoft and Google using their cash “productively” enough?