There is no question that dividends are one way public companies return cash flow to investors, but statistics prove that float shrink is better for overall price performance as the stock of companies who shrink the float using free cash flow rise more then companies using the same amount of cash to pay dividends.
The basic idea being to float a shell company in London, raise some cash, then use the cash and the float to reverse in some large but foreign and privately owned resource company.
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Retailers enjoy the cash float while recipients rue their absentmindedness.
Mr Nadir said that he could not give precise details of a cash "float" kept by his mother and that it was not his affair.
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For those not in the know, companies create cash for investment via float shrink.
It would apparently prevent companies with less than 25% of their shares in free float from making a cash-and-stock bid for a company domiciled in Luxembourg.
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And going forward into a world of little economic growth, where money printing and debasing the currency is the standard, I only want to own companies that consistently grow free cash and use that cash to shrink the float.
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But if a company keeps growing free cash flow and uses part of the cash to keep shrinking the float, why would not such a company outperform an equivalent dividend payer?
Over the past year or so, portfolios of companies that are using free cash flow to shrink the float have not only significantly outperformed all dividend ETFs, but also the overall market.
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Instead it's a suggestion that rather than attempting to divine the market rate for cash, the Fed should float the funds rate that it sets so that market forces can equalize the supply of and demand for credit.
Therefore, to invest for the future while protecting as best as possible against a future market downturn, I recommend buying portfolios of companies shrinking the trading float of shares and using free cash flow to do so.
Two, in all conversations I have with investors, I recommend dollar cost average buying of companies using free cash flow growth to shrink the trading float of shares.
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Companies that have been shrinking the trading float of shares the most using free cash flow have not only significantly outperformed the high dividend ETFs, but the overall market as well.
At this time the company has more cash than debt, and can afford to float the risk of higher SACs while they may be necessary in the competitive environment.
Float shrink is the other way of using corporate cash to benefit shareholders.
But postponing the float might worry investors who were hoping that the cash raised would help BT raise money to combat its mounting debts as part of a wider restructuring package announced in November.
That float being some multiple of what you actually have as your own cash or capital?
And if they need cash urgently, troubled companies are free to write cheques which they cannot cover and float commercial paper they are unable to redeem.
To explain why, imagine you own 1% of a company that has generated enough free cash flow so that it is deciding whether to pay a 6% dividend or shrink the float 6%.
What is left is free cash flow that can either be added to the balance sheet or distributed to shareholders via dividends or float shrink.
Bank analyst Dick Bove speculates that it could be receiving a commission from American Express every time cash is loaded on to the card or that it might be sharing in the return on the float.
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