vrdiver wrote:I don't disagree that if returning the cash to shareholders is the best idea the board can come up with then that's a good idea, but I expect good companies to be identifying opportunities, not shrinking the company. If a company like Land sells an asset shouldn't they be in the business of buying another asset and making a profit? that's not squandering, that's business development. If a suitable asset is not readily available I'm happy for them to build a war chest, ready for when the opportunity comes. Right now we're less than two years from a major political event called Brexit, which is going to stir up who knows what. I'd have thought that alone would be pause for thought before parting with the cash.
In that case, you should avoid the shares of Melrose. Their business model is to buy engineering and industrial businesses that are not doing well, restructure them, and then sell them on. It's a sound model and investors in their shares have done well.
However, their policy is to distribute cash when they sell a holding, and then later do a rights issue to fund the next acquisition. Last year it actually disgorged most of its net value in cash, following a disposal, and then did a rights issue to raise funds.
If you hold it, you need to not mind such back and forth.