— Meb Faber From Shareholder Yield: A Better Approach to Dividend Investing
Basically CEOs have five essential choices for deploying capital – investing in existing operations, acquiring other businesses, paying down debt, or repurchasing stock – and three alternatives for raising it – tapping internal cash flow, issuing debt, or raising equity. Think of these options collectively as a tool kit. Over the long term, returns for shareholders will be determined largely by the decisions a CEO makes in choosing which tools to use (and which to avoid) among these various options….In fact, this role just might be the most important responsibility any CEO has, and yet despite its importance, there are no courses in capital allocation at the top business schools.”