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i didnt read much of this thread so I am gonna take a shot at what he meant.

Excessive capital, if its sitting in the bank doing nothing but earning low returns would have been better off being returned to shareholders (special dividends etc) so that they could make better use of it. To the extent that the capital is sitting within the company earning less than they could have elsewhere, value is being destroyed.

For example, if you were provided with one of two investments:

1. $100k sitting in an account that will earn 5% pa but cannot be withdrawn or sold until in 20 years time; or,

2. $100k that you can take now and do anything you wish with it

which option would you pay more to purchase?

[QUOTE="resourcesman, post: 197502, member: 9810"] i didnt read much of this thread so I am gonna take a shot at what he meant. Excessive capital, if its sitting in the bank doing nothing but earning low returns would have been better off being returned to shareholders (special dividends etc) so that they could make better use of it. To the extent that the capital is sitting within the company earning less than they could have elsewhere, value is being destroyed. For example, if you were provided with one of two investments: 1. $100k sitting in an account that will earn 5% pa but cannot be withdrawn or sold until in 20 years time; or, 2. $100k that you can take now and do anything you wish with it which option would you pay more to purchase? [/QUOTE]

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