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Consilient Observer
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août 14, 2025

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août 14, 2025

 
 
  • The goal of this report is to discern the proper amount of cash a company should hold, which takes us into key topics around capital allocation and capital structure.
  • Cash is at the same time a non-productive holding that creates a drag on return on invested capital, as well as a resource that provides flexibility to make future investments that create value.
  • We start by sharing empirical data on the cash holdings of public companies in the U.S. since 1970, which reveals a steady rise since 1990 driven by a change in mix toward sectors that invest more heavily in intangible assets.
  • Next we discuss theories of why companies hold cash and then we review their options should they choose to disburse excess cash.
  • We observe a positive correlation between the level of cash holdings and how much a company invests in intangibles, how small the company is, how concentrated the company is, and if it’s in the introduction stage of the life cycle.
 
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Counterpoint Global’s culture fosters collaboration, creativity, continued development, and differentiated thinking.
 
 
dan.callahan
Vice President
Counterpoint Global
 
michael.mauboussin
Head of Consilient Research, Managing Director
Counterpoint Global
 

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