Sustainable Capital Allocation

Are US corporates creating value?

Capital allocation is a dynamic process and there is no “rule of thumb” for the right allocation of capital. It is every corporate management’s fiduciary responsibility to allocate capital efficiently to build long-term value for its shareholders.

Is shareholder value being created on a sustainable basis?

Capital allocation decisions made by corporates involve substantial funds. In this study we cover about $2.7 trillion of capital over 10 years of which some 50% was returned to shareholders in the form of either Share buybacks or dividends, whilst some 50% was spent externally in the form of either capex or M&A.

We have analysed the capital allocation decisions of 100 US-based companies over a 10-year period (2008-2017) and found that only 35 created shareholder value, while others either destroyed or made no difference to shareholder value.

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Mayank Buttan

With over 10 years of fundamental investment research experience, Mayank is responsible for overseeing project and client engagements with Investment Banks, Corporate Finance Houses, M&A Advisory Firms, Hedge Funds and Private Equity Firms.

He has experience in conducting business and financial research, and providing sustainability support in various industries, including Industrials, Consumer, Technology,
and Healthcare IT.

Mayank, a CFA Level III candidate, holds a Post-graduate degree in Management (Finance) and a Bachelor degree in Science (Electronics).