From an earlier conversation I was having with Swish:
Originally Posted by dawglover05
Originally Posted by Swish
I will say this: it’s hilarious watching the market go down after news was dropped that banks like JP Morgan beat profit estimates.
Wall Street is so mad the fed cut isn’t happening lol
I got one for you, bro. Lockheed has spent $20 billion on stock buybacks the last five years. Found that out last week. Great stuff, isn’t it?
20 bill? Daaaamn!!! I wish I was that poor
It's a huge problem. When you are a defense contractor doing 90%+ of your business with the federal government, what kind of message does it send that you spend that kind of money, over that many years, into repurchasing your stock. I'd be curious to see how much more F-35s and whatnot we could have gotten from them for that amount. I can see that some would retort on that front by saying "It's their money!" Just ask where they got it from and how they were able to get that much of it. For me to sum it up, would you (the universal you), a taxpayer, be content knowing that a business that gets its income almost entirely from the government earns enough to repurchase its own stock to that magnitude?
A lot of people are complaining about sending aid to Ukraine, but apparently most people feel comfortable that we give our defense contractor - just one in this case - that much cash that they can put that kind of investment toward just repurchasing your stock. It goes back to the Jack Welch era at GE where shareholder equity trumps all else, including capital investments and a quality product (see Boeing for a prime example on that front). It also doesn't end with Lockheed. Check out how much RTX has invested recently into repurchasing its own stock.
The other big problem is that they are prioritizing things like stock repurchases over prioritizing investing in their own capital. Some contractors aren't even reinvesting in their own capital at the depreciation rate. Why? Well, there is no competition. The long term problem, though, is that I don't know how this will affect our long term readiness. Boeing has already hit the drop zone, both on the commercial and military side. Years of prioritizing short-term shareholder gain at the expense of quality products and capital investment has done a number.
I have concerns.
