100 Billion In Debt

BlueFox

Yikes. It looks like the King will soon be the Joker.

https://www.cnn.com/2019/07/24/business/ab-inbev-debt-beer-ipo/index.html

Tony M

Give me a frkn break!

Going into the African market and doing so with debt? A 100 Billion to buy that Co. there!

I guess playing with other peoples money ( shareholders) is what they do. Maybe it keeps them from paying taxes if they do at all.

I'm going to read some more.

pitdogg2

I have not bought an Anheuser-Busch product since they sold out to inbev. I have not bought a Miller product since they bought SAB. I have drove to Indiana or Ohio to buy Yuengling. When @schwarcw and @ESavinon came to @SCompRacer's house i reached out to @schwarcw and asked him to bootleg some products for me. A 12pk. will last me months i might drink 2 beers a month nowadays so the case Carl and Ed brought will last me a year .... Well unless my kids scarf it down.
lol

kharp1

I have no fear they will weather this.

nooshinjohn

Fake news...

F1nut

I took a sip of Bud once......spit it right out. Foul stuff.

BlueFox

I enjoyed it until my taste moved on. The business part is I can’t understand.

Kex

Don't invest much in that market, but strikes me as a sensationalist article, prima facie, and AB InBev is so much more than Budweiser...

1. Worlds largest brewer, based in Belgium, following the acquisition of AB by InBev, and subsequent purchase of Miller.
2. 2018 sales = 55B USD
3. 2018 margin = 63%
4. EBITDA = 39%
5. Normalized EBITDA growth = 8%
6. Forward Dividend of 2.33%
7. Market price close to 52 week high
8. 22 of 32 analysts recommend Strong Buy or Buy. 9 recommend Hold.

With numbers like those, the debt load seems reasonable, especially with access to low interest rates for borrowing. Why would they even worry about manageable debt? The dividend may be lowered, but is still quite generous.

Viking64

I drank Bud for about 6 months in the mid-80s. I didn't know any better and there weren't so many options then. Oh, to be young, dumb, and full of....crappie beer.

tophatjohnny

F1nut wrote: »

I took a sip of Bud once......spit it right out. Foul stuff.

I took a look at CNN once...spit it right out. Fake stuff..

motorhead43026

Corporate debt is currently at an all-time high.

Apple has 122B in debt, fact. Why use your own money when borrowing is so cheap.

When corporations do stock buybacks it is with debt.

Why do you think low interest rates are here to stay? Corporations demand it that's why.

jflail2

Apple's enterprise value is also just under $1 trillion, so their leverage (debt/tev) is only at about 10%. The idea behind using debt instead of cash is pretty simple. If the rate of return on my investment is well enough above my borrowing costs, that delta says the debt is worth taking on. So if I can build an office building that is estimated to yield 6% at completion, and I can borrow the debt to pay for the build at 3%, that 3 percentage point difference says this is worth doing.

And there is no rule/standard that says corporations will only use debt for share buybacks. It certainly happens, but they'll also use cash if their industry/potential investments are trading at a significant premium. So instead of buying an office building that has maxed out occupancy and the highest rent per square foot feasible (in other words no more room to grow), a company might choose to spend their cash on making their shares more valuable through a buyback program.

Agreed on interest rates. Speaking simply, low borrowing costs= economic growth. The fed should, in theory, be raising or decreasing rates based on how inflation is moving. If it gets out of control, they'll have to raise rates to cool things off a bit, corporate feedback be damned (and most public companies understand the need to rein in inflation anyway.)

motorhead43026

Low interest rates don't help us middle class savers at all. Wish I could get just a 5% return. I could take in 50K a year risk free.

EndersShadow

F1nut wrote: »

I took a sip of Bud once......spit it right out. Foul stuff.

How'd Bud enjoy it @BlueFox

jflail2

Well, they do in some instances. The rate I signed for my Lexus was incredibly cheap, as was the rate I purchased my home at in 2013. In general, as rates increase, the number of potential homebuyers decrease, as the increases can at times price them out of the homes they'd want.

If you want something north of 5%, and are still a ways away from retirement, throw your money into Vanguard's S&P 500 ETF and let it ride. The long term average annual return from the S&P 500 is between 7-8%. While very good or bad years can cause dramatic spikes or drops, from a long-term perspective you'll still end up with that 7-8% per year.

If rates are low, and companies are growing earnings, your stock investments are going to well outpace the growth of your bond/debt investments anyway. You can get the yield you want over the long-term, you just need to put the money in the right place and not pull it out in a panic when we have a bad year.

Edit: You can even find multiple savings accounts that are currently paying north of 2%, and with no minimum deposit. Marcus (Goldman Sachs) currently has a 2.15% yield with no fees and no minimum deposit. So you can even have your cash savings yielding enough where you're almost keeping up with inflation.

motorhead43026

jflail2 wrote: »

Well, they do in some instances. The rate I signed for my Lexus was incredibly cheap, as was the rate I purchased my home at in 2013. In general, as rates increase, the number of potential homebuyers decrease, as the increases can at times price them out of the homes they'd want.

If you want something north of 5%, and are still a ways away from retirement, throw your money into Vanguard's S&P 500 ETF and let it ride. The long term average annual return from the S&P 500 is between 7-8%. While very good or bad years can cause dramatic spikes or drops, from a long-term perspective you'll still end up with that 7-8% per year.

If rates are low, and companies are growing earnings, your stock investments are going to well outpace the growth of your bond/debt investments anyway. You can get the yield you want over the long-term, you just need to put the money in the right place and not pull it out in a panic when we have a bad year.

Edit: You can even find multiple savings accounts that are currently paying north of 2%, and with no minimum deposit. Marcus (Goldman Sachs) currently has a 2.15% yield with no fees and no minimum deposit. So you can even have your cash savings yielding enough where you're almost keeping up with inflation.

I see you use the same inflation formula as our government. You do live in the real world?

No disrespect, just asking?

jflail2

Can you elaborate? I'm not sure what you're referencing in regards to a formula. If you're refering to "raising rates cools the economy a bit and tapers inflation", that's kind of generally accepted from an economic standpoint.

deronb1

motorhead43026 wrote: »

Low interest rates don't help us middle class savers at all. Wish I could get just a 5% return. I could take in 50K a year risk free.

Not sure having a million bucks qualifies as middle class.

tonyb

motorhead43026 wrote: »

Low interest rates don't help us middle class savers at all. Wish I could get just a 5% return. I could take in 50K a year risk free.

Really ? Does a low interest rate on your mortgage help you save money ? When corporations have low interest rates, they are able to attract investors, spend more on expansion or R&D, hire more people, ….that helps the middle class.

Where corporations go wrong in my view, is the crazy salaries they pay their executives, along with their granted golden parachutes. They are beholden to the share holders, that is their fiduciary responsibility, not if they are paying you a good salary and benefits. The upper executive levels of corporations are run by a big boys club, and your/we are not in it. They protect themselves at the cost of you and me.

That said,

Saving money in something like a savings account is never going to make you money, least not like the old days of compound interest bank accounts. You want a 5% return ? The stock market delivers that every year. What are you waiting for ?

Jflail2- excellent post my man.

jflail2

Thanks Tony. And I'd have to agree on executive comp. I'd love to see companies benchmark and cap compensation based on the long-term performance of the company, and not just near-term stock price movements. To be fair, I suppose that's what LTIPs are for, but we could still do better.

For anyone interested in just riding the S&P 500, the Vanguard S&P 500 ETF's ticker is VOO, and the expense ratio is just .03%.

motorhead43026

tonyb wrote: »

motorhead43026 wrote: »

Low interest rates don't help us middle class savers at all. Wish I could get just a 5% return. I could take in 50K a year risk free.

Really ? Does a low interest rate on your mortgage help you save money ? When corporations have low interest rates, they are able to attract investors, spend more on expansion or R&D, hire more people, ….that helps the middle class.

Where corporations go wrong in my view, is the crazy salaries they pay their executives, along with their granted golden parachutes. They are beholden to the share holders, that is their fiduciary responsibility, not if they are paying you a good salary and benefits. The upper executive levels of corporations are run by a big boys club, and your/we are not in it. They protect themselves at the cost of you and me.

That said,

Saving money in something like a savings account is never going to make you money, least not like the old days of compound interest bank accounts. You want a 5% return ? The stock market delivers that every year. What are you waiting for ?

Jflail2- excellent post my man.

I am 66 years old, my stock market days are coming to an end. My house is paid for and I retire in 2 years if not earlier.

I have lived through 3 market busts, no more. You young guys, gals can ride them out.

Although Tony is a bit on the geriatric side.

pitdogg2

EndersShadow wrote: »

F1nut wrote: »

I took a sip of Bud once......spit it right out. Foul stuff.

How'd Bud enjoy it @BlueFox

You had better sleep with both eye's open......

never mind you're doomed. tell the wife I'd be glad to be a pallbearer... least I could do for you

jflail2

I hear ya motorhead. Obviously speak to your financial advisor before adjusting anything, but your portfolio should be very bond focused at this point, if it's not already.

One way you could keep some equity in the fold and still seek yield is something like the SPDR Dividend ETF (ticker SDY.) That's a fund that is focused on companies with consistent dividend payments, and have consistently raised their dividends over a 20 year span. So there's still the potential for price fluctuation, but at least you're getting that steady stream of income through dividends. The yield isn't at the 5% you want, but there's always trade offs.

codycatalist

AB owns a lot of craft breweries now. A good amount of the mainstream breweries have all been bought out, not all but a decent portion.

Hell they bought a local brewery in Az for 1 Billion.

I love me some Lagunitas Brewing, they were bought out by Heineken and now Lagunitas brews Newcastle...it's never been better tasting.

kevhed72

tophatjohnny wrote: »

F1nut wrote: »

I took a sip of Bud once......spit it right out. Foul stuff.

I took a look at CNN once...spit it right out. Fake stuff..

Yeah, I prefer the Fair and Balanced Kool Aid myself😉

mhardy6647

codycatalist wrote: »

...
I love me some Lagunitas Brewing, they were bought out by Heineken and now Lagunitas brews Newcastle...it's never been better tasting.

The truth, and irony, of that statement is palpable.

tonyb

motorhead43026 wrote: »

tonyb wrote: »

motorhead43026 wrote: »

Low interest rates don't help us middle class savers at all. Wish I could get just a 5% return. I could take in 50K a year risk free.

Really ? Does a low interest rate on your mortgage help you save money ? When corporations have low interest rates, they are able to attract investors, spend more on expansion or R&D, hire more people, ….that helps the middle class.

Where corporations go wrong in my view, is the crazy salaries they pay their executives, along with their granted golden parachutes. They are beholden to the share holders, that is their fiduciary responsibility, not if they are paying you a good salary and benefits. The upper executive levels of corporations are run by a big boys club, and your/we are not in it. They protect themselves at the cost of you and me.

That said,

Saving money in something like a savings account is never going to make you money, least not like the old days of compound interest bank accounts. You want a 5% return ? The stock market delivers that every year. What are you waiting for ?

Jflail2- excellent post my man.

I am 66 years old, my stock market days are coming to an end. My house is paid for and I retire in 2 years if not earlier.

I have lived through 3 market busts, no more. You young guys, gals can ride them out.

Although Tony is a bit on the geriatric side.

Youngsters should not be afraid of market fluctuations. They go up and down all the time, bust out and come back strong. Being close to retirement age though, that risk isn't worth taking so I understand that.

My advice to you is, stop worrying about money, retire as soon as you can. Lifestyles can be adjusted to accommodate income, but time is the real treasure. We never know how long we have walking upright, or even just walking. Enjoy life, because like ice cream, you have to enjoy it before it melts.

mhardy6647

tonyb wrote: »

motorhead43026 wrote: »

tonyb wrote: »

motorhead43026 wrote: »

Low interest rates don't help us middle class savers at all. Wish I could get just a 5% return. I could take in 50K a year risk free.

Really ? Does a low interest rate on your mortgage help you save money ? When corporations have low interest rates, they are able to attract investors, spend more on expansion or R&D, hire more people, ….that helps the middle class.

Where corporations go wrong in my view, is the crazy salaries they pay their executives, along with their granted golden parachutes. They are beholden to the share holders, that is their fiduciary responsibility, not if they are paying you a good salary and benefits. The upper executive levels of corporations are run by a big boys club, and your/we are not in it. They protect themselves at the cost of you and me.

That said,

Saving money in something like a savings account is never going to make you money, least not like the old days of compound interest bank accounts. You want a 5% return ? The stock market delivers that every year. What are you waiting for ?

Jflail2- excellent post my man.

I am 66 years old, my stock market days are coming to an end. My house is paid for and I retire in 2 years if not earlier.

I have lived through 3 market busts, no more. You young guys, gals can ride them out.

Although Tony is a bit on the geriatric side.

Youngsters should not be afraid of market fluctuations. They go up and down all the time, bust out and come back strong. Being close to retirement age though, that risk isn't worth taking so I understand that.

My advice to you is, stop worrying about money, retire as soon as you can. Lifestyles can be adjusted to accommodate income, but time is the real treasure. We never know how long we have walking upright, or even just walking. Enjoy life, because like ice cream, you have to enjoy it before it melts.

As a friend of ours, who is now a pastor, says

I've never sat with a person at their death bed and heard them say "I wish I would've worked more".