Tuesday, August 5, 2014

Friday’s (8/1) edition of the Wall Street Journal carried an article entitled Record Cash, Record Debt   by Ted Mann and Theo Francis.  The authors worked with Calcbench in order to obtain data for their article.  Included in the dataset were Unremitted Foreign Earnings and Debt levels across the entire US filing universe. 

The objective of the authors was to identify firms with increasing overseas earnings and increasing debt levels.  The results are fairly straightforward, defer taxes on overseas earnings, borrow cheaply against the overseas earnings, invest where you can make more, and as an added kicker, take a deduction on the interest paid on the debt.  It looks like a corporate win-win.  Francis and Mann found more than 200 US firms used this technique effectively in 2013 (Francis, Mann, WSJ).

Firms and investors have been executing carry trades like this forever, but using tagged financials will help identify patterns more quickly.  This in turn moves away from anecdotal evidence into the realm of hard fact.  Anyone with the remotest of interest in economics or finance should be running to get at this information. 

Why did the authors at one of the most prestigious newspapers in the world come to Calcbench?  They couldn’t get the data anywhere else. 

The takeaway for users is that just like our friends at the WSJ used Calcbench, so can you.  Sign up today!

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