PRICE PLUNGE:Having almost halved in price on Tuesday, Irish Life & Permanent is valued at just €110 million. That gives it a paltry 0.28 per cent Iseq weighting, less than one-tenth that of Paddy Power or not even one-hundredth of building materials group CRH's market capitalisation.
A bet on the Iseq, once dominated by banks and construction companies, remains a punt on a mere handful of companies, with just six companies making up two-thirds of its market cap. CRH accounts for 29 per cent of the index, followed by Ryanair (11 per cent), Kerry (9 per cent), Arzyta (7 per cent), Elan (6 per cent), and DCC (5 per cent).
The index accounts for a mere fraction of 1 per cent of the global equity market. This, coupled with its narrow nature, meant pension funds should have been wary of overweighting Irish equities. Unfortunately, they weren’t – in 2007, Irish equities occupied 19 per cent of pension fund portfolios, “more than may have been logical”, as one pension executive later admitted.
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FLOATING FEW: There's increased chatter regarding stock market flotations for social networking companies such as Facebook, Groupon and Twitter, with secondary market valuations looking ever more crazed.
“Most of them will be overpriced,” warned Warren Buffett last week, prompting a few commentators to wonder if a new technology bubble might be forming.
Hardly.
The hype centres around a select few companies. Just 20 tech companies floated in the US last year, compared to 380 in 1999.
The US technology sector gained just 12 per cent last year, making it the fourth worst-performing sector. More significantly, the Nasdaq 100, having peaked at 4,700 in 2000, is less than half that figure today.
Former high-fliers such as Microsoft and Intel now enjoy more geriatric share price movements as well as single-digit price-earnings ratios. Even Apple, the current Nasdaq darling, trades at just 13 times 2012 estimates.
Tech stocks are among the most cash-rich of firms. Apple has almost $60 billion in cash and securities, with Microsoft ($41 billion), Cisco ($40 billion), and Google ($35 billion) also amassing eye-popping cash piles.
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JET SET:Corporate governance activists routinely lambast executives of publicly traded companies for their outsized pay packets. A new study has found that that's not the only problem – their jets are also too large.
The paper found that firms owned by private equity funds “average jet fleets at least 40 per cent smaller” than in similar public firms.
Other studies have found that companies underperform when chief executives live in large mansions or receive significant company perks.
