Motley Fool Money Capital Allocation: The Superpower of (Some) Public Companies
May 14, 2022
Bill Mann, a senior analyst at Motley Fool with a knack for capital allocation and long-term investing, dives into the fascinating world of corporate cash management. He discusses how strategic decisions—like paying dividends, engaging in stock buybacks, or making acquisitions—can affect a company's growth. The conversation highlights six companies excelling with their capital allocation, explores when it's a “crime” to pay dividends, and shares insights on ensuring long-term financial success amidst market fluctuations.
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Capital Allocation Priorities
- Companies with high return investment opportunities should reinvest all profits.
- Conversely, companies lacking such opportunities should return capital to shareholders.
Constellation Software's Growth
- Constellation Software has compounded at roughly 30% for over 10 years.
- This growth has been achieved primarily through a disciplined M&A strategy.
WD-40's Surprising Returns
- WD-40, despite 5% annual growth since 2000, saw an 8x share price increase.
- This demonstrates the power of careful capital allocation.