Undervalued Screen 10/31/16 outperforms Overvalued by 470 basis points to Nov 23rd

So far this month the Undervalued are ahead of the Overvalued by +6.5% to +1.8% relative to the S&P 500.  However, the average of all stocks covered ouperformed the S&P by 4.5%.  Compared to our universe, the Undervalued are +2.0% and the overvalued -2.7%.

This table shows the Sectors/Industries of strength and weakness for both.

To open the file click here

(c) 2016 Robert L. Colby

CEO Pay vs Buybacks

In response to John Simon's excellent article in today's Wall Street Journal on "Shareholder Value" and CEO pay:

http://www.wsj.com/articles/the-two-words-that-earn-ceos-a-pay-raise-1478622713

Here is a different take on the same subject.

The correlation between a company’s percent change in outstanding shares from 2008-15 and the rank of the CEO’s pay[1] in 2015 was found to be -.18 in a sample of 100 S&P equities.

The reduction in shares outstanding leads to an increase in Earnings per Share but not in Net Profit.  The correlation between the rank in change in shares outstanding and the rank of EPS - Net Profit growth is .88.

The conclusion therefore is that there is a tendency to pay CEO’s more for the illusion of growth rather than growth itself.

©2016 Robert L. Colby                                                                                                   corequity@blogspot.com

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[1] Equilar May 25 2016 study of 341 S&P 500 CEOs pay