Dividend yields

High dividend yields - can they be sustained? Here's Tim Boreham in the Australian having a look.

Let's all raise capital

Australian companies are leading the world in capital raisings it seems, and part of the reason is the Australian regulations that make capital raisings easier to undertake.

Super funds seem to be looking for investments, and rights issues at below market seem to be attractive.

Analyst coverage and small cap firms - Australian evidence

Yep, happening here as well. The Australian reports.

It all suggests that the firms themselves see analyst coverage as important, notwithstanding the recent (& ongoing) criticism that securities analysts have come under. Assuming that research on small caps is informative, or that the visibility from coverage is beneficial, there's some scope for the market to fill the demand for small cap research.

Analyst coverage matters?

Seems to, according to this Wall Street Journal article (subscription required to view full article). Here's how it starts:

A year ago, investment analysts from seven brokerage firms shadowed the financial progress of Intevac Inc., a small, Santa Clara, Calif., technology firm. Today, a lone analyst is all that remains.

"That coverage was pretty important to us," says Jeff Andreson, Intevac's chief financial officer. Among other woes, losing coverage "hurts liquidity, making it harder for our institutional investors to build or sell positions," Mr. Andreson says.

Intevac isn't unique. Whether due to layoffs, attrition, retirement or brokerage firms moving analysts around, Wall Street's map of corporate coverage is shrinking these days.

Westpac cuts dividend

Westpac joins the ranks of the dividend cutters this week. Some accounting analysis helps explain why.

More bad debts for the banks

Some of the banks are set to report this week, and more doom and gloom is expected, particularly with respect to bad debts. Bad debt provisioning is always one area where managers have some discretion. In the current climate, asset writedowns are also going to be of interest, and have been the focus of discussion of Macquarie's recent results announcement.

Banks and mark to market

Here we (finally) have a defense of mark-to-market accounting - in The Economist.

Key graphs:

Standard-setters should defuse the argument by making clear that their job is not to regulate banks but to force them to reveal information. The banks, their capital-adequacy regulators and politicians seem to dream of a single, grown-up version of the truth, which enhances financial stability. Investors and accountants, however, think all valuations are subjective, doubt managers’ motives and judge that market prices are the least-bad option. They are right. A bank’s solvency is a matter of judgment for its regulators and for investors, not whatever a piece of paper signed by its auditors says it is. Accounts can inform that decision, but not make it.

What they used to teach you at Stanford

Seven lessons learned by someone who received an MBA back in 1972.

Value investing - still appropriate?

Ben Steverman in Businessweek asks whether value investing is still the way to go.

Disciples of the value strategy, like Berkshire Hathaway's (BRKA) Warren Buffett, focus on the long-term intrinsic value of a company, hoping to buy shares in good companies at reasonable prices. By focusing on value, they avoid fast-growing firms with expensive stocks, and, by thinking long term, they try not to worry about the fickle gyrations of the market from month to month or day to day.

But amid a severe recession and financial crisis, true value has proven to be a slippery concept. "It's only a value if you can accurately assess today what the future profits will be," says Richard Sparks of Schaeffer's Investment Research. Particularly for financial stocks—some of which haven't or won't survive the crisis—it's nearly impossible to identify the long-term value, whether through profits, cash flow, or other measures.

Buffet on mark to market accounting

Warren Buffet offers his thoughts on accounting and the GFC. WSJ link here

Now comes Warren Buffett, a big investor in Wells Fargo, M&T Bank and several other banks, who, during his marathon appearance on CNBC Monday, clearly called for suspension of mark-to-market accounting for regulatory capital purposes.

We add the italics for the benefit of a House hearing tomorrow on this very issue. Mark-to-market accounting is fine for disclosure purposes, because investors are not required to take actions based on it. It's not so fine for regulatory purposes. It doesn't just inform but can dictate actions that make no sense in the circumstances. Banks can be forced to raise capital when capital is unavailable or unduly expensive; regulators can be forced to treat banks as insolvent though their assets continue to perform.