You have to admit that we live in times of tremendous dissatisfaction with stock prices, even, in some cases, when they are good.
First, let's take the banks. You would have thought that the Federal Reserve fired a starting pistol last night when it announced that 25 banks had been okayed to return capital to shareholders. One after another announced some fairly bountiful dividend boosts and share buybacks. We are nowhere near where we were in terms of the sizes of dividends or share counts -- meaning there's a ton of shares out there, and not nearly as much going to shareholders in terms of dividends as there were before the great recession. But it is a pleasant sight to see executives tripping over each other to reward long-suffering shareholders with some excellent bounty.
I am particularly impressed by the job that Mike Corbatt's doing at Citigroup (C), as he truly stuck his neck betting that he would get the approval the bank now richly deserves, and now that bank stock can start working its way back to some semblance of where it was before the downturn.
Expectations about returns were all over the map, but it seems like KeyCorp (KEY) and Morgan Stanley (MS) surprised to the upside in their return plans. Can someone please tell me what the heck is going on at Bank of America (BAC) though, that they continually surprise the street the wrong way?
Still, this group is itching to lead this market higher, and I have to tell you that if you truly believe the dollar is going higher and the Fed is going to raise rates, you now have your marching orders of what to buy: the banks that are no longer in the clutches of the government.
But it isn't just the banks that want to do the right thing. Consider Greg Hayes at United Technologies (UTX), the new CEO and former CFO who came in not that long ago and has decided to do some serious shaking up of the organization. I think he didn't technically need to do anything. No one was breathing down his neck, but the decision to shed Sikorsky, which I regard as bedrock UTX, shows you that he's deeply unsatisfied with his own company.
But is he as unsatisfied as Jeff Immelt who, once again, wants to take the axe to the now shriveled GE Capital (GE) business in order to find a way to boost returns? This was a tough one to swallow, given that we learned that Immelt earned $37 million, all in including a $5.4 million bonus and a big bump in his pension.
Immelt earned the pay raise for "unprecedented action in 2014 to reshape its portfolio to focus on high-value earnings from core infrastructure businesses," according to the company. Shuffle he did, but the stock started the year at $27.40 and finished at $25.19, so I can see why he would be unsatisfied with all but that pay package. I know that when you write these stories about total comp the companies always say "hey, that was mostly pension," but tell that to the average worker at GE and see what she says about the difference between pension vs. salary or bonus.
Or how about Nelson Peltz and DuPont (DD)? Peltz wants change, he wants new board members, four of them, he wants DuPont to do more than its doing, he wants overhead cuts and changes in style and urgency. Meanwhile, DuPont is the best performing stock this year of the six major chemical companies I follow. That's some deep dissatisfaction!
Now, I know that in the end the strong dollar and the possibility that the Fed raises rates sooner rather than latter are regarded as the two twin bull slayers of the era. I also know that sometimes management wants to do the right thing and hasn't pulled it off, à la GE. But there is a larger takeaway here: when everyone's so upset with how their stocks are doing, it's awfully hard to keep the market down for long.
Sure, it can get hammered on the macro, but you have to admit the desire to return capital has never been greater. It can't offset the immediate declines that a currency contagion can spread. It's still nice though, to know that when a stock does get pounded there's someone doing something about getting the stock back up besides just hoping for good earnings to materialize.
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