“According to Morgan Stanley, companies that haven’t spent on new equipment have outperformed those that have spent for most of the recovery. The situation could be set to change: For the last four months, companies with high levels of capital spending have outperformed those with low levels.
“Savita Subramanian, head of equity and quantitative strategies at Bank of America, thinks this could mark a turning point. Buying the stock of ‘companies with the largest share buybacks was the best performing strategy from 2012 through most of 2013, but is one of this year’s worst,’ she wrote in a May 19 research note. This change in investor preferences could lay the groundwork for higher productivity growth.” [Bloomberg Businessweek, May 25]