Long/Short Investments
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Long/Short Investments in L/S Equity: Valuation and Ideas,

Current Corporate Actions May Be Hurting the Labor Market

Over the past couple years, companies in the S&P 500 have paid out more than 100% of their earnings in the form of dividends and stock buybacks. Historically, this percentage comes to approximately 75%. While this is good for incumbent shareholders, the short-termism of the approach isn’t positive or productive in the long-run (although it’s naturally within the incentive structure of being a public company).

The weak GDP growth in the U.S. forces managers to create value through less these less organic means, while skimping on longer-term growth approaches, such as investments into infrastructure and human capital. According to a study by the Harvard Business Review, 80% of managers would delay value creative spending on R&D, advertising and marketing, and hiring to meet earnings benchmarks. More than 50% said they would delay a project even if it were to be to the detriment of long-term value.