overshot the mark price

"Chairman Pitofsky"s timely book teaches us important truths about antitrust. This book convincingly rebuts the Chicago School approach to economics and competition policy while reminding us that the antitrust laws, when effectively applied, are robust tools that enhance competition and benefit consumers. Chairman Pitofsky and the other distinguished contributors provide a badly needed counterpoint to the excesses of Chicago School economic theory that has led to an overly hands-off and lifeless approach to antitrust enforcement in recent years. This excellent volume should be studied by all those who care about competition policy."--Senator Herb Kohl

"Into the grand antitrust debate between Warren Court advocates, on the one hand, and the treatises and court opinions out of the Chicago School tradition, on the other, comes finally a voice of reasoned moderation--or rather a full-throated chorus of such voices. With a clear-eyed regard for the paramount importance of consumer welfare a the central governing principle of antitrust enforcement, this collection of essays deserves to be read carefully by practitioners, academics and politicians--but especially-- and exceedingly carefully--by federal judges all across the country, not least of all by the current justices of the U.S. Supreme Court."--John Shenefield, Former Assistant Attorney General for Antitrust

"When they asserted efficiency as the new benchmark of antitrust, the scholars of Chicago paved the way to very welcome developments. But efficiency is more and more treated as an ideology and therefore it leads to forgetting the facts and restoring presumptions. If avoiding false positives becomes the priority of antitrust, how many real negatives will receive undeserved immunity? The questions raised by this book are no less timely than those raised by those scholars forty years ago and deserve no less attention from practitioners, academics and judges all over the world. I am confident that some copies of it will also be available in the library of the U.S. Supreme Court."--Giuliano Amato, Former Prime Minister of Italy

"This collection of essays--by lawyers and economists, many of whom are former antitrust enforcement officials--will generously reward a close read by anyone who is interested in the current intellectual state of antitrust thinking. As largely a critique of recent legal decisions and of recent enforcement, these essays are likely to form the basis for new directions for antitrust in the coming decade."--Lawrence J. White, Professor of Economics, NYU Stern School of Business

"Taken as a whole, the book makes a forceful argument that the many positive contributions of the Chicago school have been overshadowed by an increasingly conservative laissez faire view of antitrust in the federal agencies and the courts. The results of this change have been an emphasis of theory over empirical evidence and a deliberate choice among confl icting economic theories and evidence, rather than a consensus about that theory and evidence. For me, this was the best and most provocative antitrust book of 2008." --Spencer Weber Waller, Loyola University Chicago, School of Law

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It is possible that construction underway in 2011 and subsequently has or will alleviate the apparent shortage of research implied by the data in Figure 1 and overshoot the mark. That remains to be seen.

You"re inclined to overshoot the mark. News from a distance corroborates your ideas about the future but there is a need to lower expectations if you are to succeed.

Lowering volatility and sopping up excess liquidity can be beneficial, but there are risks here as well: regulators can easily overshoot the mark, leaving financial markets with weakened capacity for price discovery and too little liquidity.

On great occasions, he tends to overshoot the mark, calling for impossibilities like an "end to evil." He lacks a rhetorical mean, much less the rhetorical mien that served Ronald Reagan so well.

Other thesps, like the normally sensitive Mezzogiorno and Rubini, overshoot the mark in silly caricatures, while a series of famous faces--Umberto Orsini, Mariangela Melato, Michele Placido--turn up in irritating cameos.

To judge from the program of the 2001 meeting the North American Conference on British Studies, many early modern historians have run right by these would-be colleagues and have embraced the issues of "cultural studies." Whole panels (some of them tantalizing) engage "the politics of feasting," "gender, class, and consumer behavior," "sight, smell, and taste," "social and cultural space," "masculinity," "working women," and "early cultures of the object." Has the mad dash to the middle led some on each side, as it were, to overshoot the mark?

However, I venture to argue that the more adamant of Moore"s disciples--those who reject science and empirical knowledge as sources of normative ethical guidance--badly overshoot the mark. In his germinal book Consilience, Wilson argues that ought is a shorthand term for the compelling force of the store of useful social experience, a compact generalization from those behaviors that have served the evolution of our socially interdependent species.

Vatikanisches Konzil (Stuttgart, 1977), that the deliberations were not free, or that the majority bishops were manipulated like marionettes, overshoot the mark. Schatz"s critical distance and balance lend his nuanced judgments an authority that all scholars and commentators on the Council will have to reckon with.

How the Chicago School Overshot the Mark is about the rise and recent fall of American antitrust. It is a collection of 15 essays, almost all expressing a deep concern that conservative economic analysis is leading judges and enforcement officials toward an approach that will ultimately harm consumer welfare. For the past 40 years or so, U.S. antitrust has been dominated intellectually by an unusually conservative style of economic analysis. Its advocates, often referred to as "The Chicago School," argue that the free market (better than any unelected band of regulators) can do a better job of achieving efficiency and encouraging innovation than intrusive regulation. The cutting edge of Chicago School doctrine originated in academia and was popularized in books by brilliant and innovative law professors like Robert Bork and Richard Posner. Oddly, a response to that kind of conservative doctrine may be put together through collections of scores of articles but until now cannot be found in any one book. This collection of essays is designed in part to remedy that situation. The chapters in this book were written by academics, former law enforcers, private sector defense lawyers, Republicans and Democrats, representatives of the left, right and center. Virtually all agree that antitrust enforcement today is better as a result of conservative analysis, but virtually all also agree that there have been examples of extreme interpretations and misinterpretations of conservative economic theory that have led American antitrust in the wrong direction. The problem is not with conservative economic analysis but with those portions of that analysis that have "overshot the mark" producing an enforcement approach that is exceptionally generous to the private sector. If the scores of practices that traditionally have been regarded as anticompetitive are ignored, or not subjected to vigorous enforcement, prices will be higher, quality of products lower, and innovation diminished. In the end consumers will pay.

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To the casual observer, the crude oil price has been on a slippery slope this year. Day after day it seems that the price is setting a new multi-year low, with little reprieve in sight.

Deutsche Bank’s global strategy team, consisting of Binky Chadha, Parag Thatte and Rajat Dua, describe current market positioning in crude market as “curious”, suggesting that the price is now 8% below its present fair value.

This is unusual. As we have noted previously, a large part of the decline in oil prices since mid-2014 was a correction from grossly overvalued levels. However as the dollar kept rising, the fair value for oil kept declining and oil generally continued to trade above fair value. The most recent leg down in oil prices, even as the dollar fell after the ECB disappointed last week has left oil prices cheap to fair value.

They also note that oil shorts – traders selling crude futures in anticipation of further price declines – currently sit near record highs, another anomaly in their opinion.Net speculative long positioning in oil hit a new low for the cycle last week. But as we have noted previously, a curious feature of oil positioning has been the stability of gross longs, with changes in net positions reflecting primarily changes in gross shorts which are now near all-time highs.

The chart below shows the relationship between gross short crude positioning and movements in the the spot price for US benchmark WTI. As it reveals, the last time gross short positioning was this high, the crude price subsequently rallied by 30%.

“Gross shorts have been rising since mid-2014 and are now near all-time highs. A short squeeze from similar levels in March saw oil prices rally over 30%”, note the trio.

Chadha, Thatte and Dua believe the rise in short positioning is particularly strange given recent weakness in the US dollar.With a rising dollar the biggest driver of lower oil prices, dollar and oil positioning have mirrored each other (inversely), especially since the big dollar up and oil down cycles began. But over the last week, oil shorts continued to rise, diverging from dollar positioning which has fallen in the wake of the ECB disappointment.

While they have stopped short of calling a rally in crude prices, suggesting that warmer weather in the US and Europe along with OPEC’s recent decision to not limit further supply may have contributed to the divergence from past relationships, the points they are making is important nonetheless.

That is, markets are already extremely pessimistic towards crude and bullish towards the US dollar. All it would take is for one, let alone both, to be proven wrong to spark a savage move higher in crude prices.

The context is a scheme where a company draws customer"s areas of interest for a product (prices, quality, innovation...) and plots its position in each area and the competitors" position.

After moving sideways for several years, United Parcel Service (NYSE:UPS) finally broke out above the previous highs between $125 and $135. In the last few weeks, the stock climbed as high as $178, and as my last article about UPS is from July 2019, it seems to be time for an update.

In the following article, we are looking at the quarterly results followed by the company’s long-term performance and dividend. Aside from the positive aspects, we also look at the company’s balance sheet, potential long-lasting effects from the pandemic and the intensifying competition from Amazon (AMZN). We end with an intrinsic value calculation.

UPS is clearly one of the companies, that is benefiting from the COVID-19 pandemic and the stay-at-home orders. When malls are closed or people are afraid to go outside, they order more online, and those orders have to be shipped to customers – and companies like UPS, FedEx Corporation (FDX), or Deutsche Post AG (OTCPK:DPSTF) in Germany come into play.

The last quarterly results clearly reflect that dynamic. Not only could UPS beat Wall Street’s expectations for revenue (beat by $1.05 billion) as well as earnings per share (beat by $0.38), UPS could also increase its revenue from $18,318 million to $21,238 million, which is reflecting an increase of 15.9% YoY. Operating profit could increase 11.0% and net income increased from $1,750 million to $1,957 million – reflecting an increase of 11.8%.

When looking at the three different reporting segments – U.S. Domestic Package, International Packages, and Supply Chain & Freight – we see increasing revenue in all three segments: U.S. Domestic Package reported revenue growth of 15.5% with the average daily volume increasing 13.8%. The adjusted operating margin rate for the segment was 8.6%.

International Package couldincrease revenue 17% with the average daily volume increasing 12.1%. Especially the outbound demand from Asia continued to be strong. This segment had an adjusted operating margin rate of 23.8%.

Supply Chain & Freightcould increase revenue by 16.5%, and growth was again driven by a strong freight forwarding demandout of Asia. The adjusted operating margin for this segment was 7.7%.

In the fourth quarter, revenue might even be higher due to additional peak surcharges that will be charged in the period from November 15, 2020, to January 16, 2021. UPS will charge additional amounts per package ranging between $1 and $4.

And, although we can expect additional revenue from these peak surcharges, it probably won’t move the needle much. Analysts are expecting revenue to grow about 10% YoY (which would be a lower growth rate than in the previous quarter), and earnings per share might stay in line with last year’s EPS (about $2.12). Management is still not providing an outlook due to the pandemic and the high levels of uncertainty: UPS is not providing consolidated revenue and diluted earnings per share guidance due to the uncertainty around the timing and pace of the economic recovery. The company is unable to predict the extent of the business impact or the duration of the coronavirus pandemic, or reasonably estimate its operating performance in future quarters.

Aside from the impressive growth rates in the last few quarters, UPS can also be called a stable investment and a sound business. Since 2000, the company could report increasing revenue in every single year with only two exceptions – 2009 and 2015. Since 2000, UPS performed more or less in line with the overall market – UPS outperformed the S&P 500 a little bit (308% return vs. 288%).

UPS also increased its dividend 11 years in a row but has a much longer history of paying dividends and keeping the dividend at least stable. Right now, UPS is paying a quarterly dividend of $1.01, resulting in a dividend yield of 2.5%, which is fine but not as interesting any more than a few months ago, when the stock was trading around $100.

Depending on what metric we are using, the company’s payout ratio is fluctuating quite a bit. If we are using GAAP earnings per share of the last four quarters ($5.27), we get a payout ratio of 77%, which is extremely high. If we are using the adjusted forward earnings per share estimates of $7.66, we get a payout ratio of 53%, which seems acceptable. Once again, it might make sense to rather focus on cash flows. UPS had generated almost $7 billion in free cash flow in the last four quarters and paid out $3.3 billion in dividends. Hence, we can call the dividend well-covered. However, we have to point out that the average free cash flow of the last five years was only $2.7 billion, and the strong cash flow of the last quarters might be an outlier. But I consider the dividend safe at this point with future dividend increases being possible.

But aside from the impressive growth rates in the last quarters and the stable performance in the last two decades, there are also some risks and issues that make us question if UPS is such a great investment. First of all, we have to look at the company’s balance sheet. While the company has $23,336 million in long-term debt and $2,382 million in short-term debt, the company’s total shareholder’s equity is only $5,606 million resulting in a debt-equity ratio of 4.6, which is extremely high.

However, when looking at operating income of the past four quarters ($7,780 million), it would take about 3.3 years to repay the outstanding debt by generated operating income, and this seems to be acceptable. We also have to point out that UPS has $8,839 million in cash and cash equivalents as well as $402 million in marketable securities, which is enough to repay more than one-third of the outstanding debt. When looking at how much debt UPS has to repay in the next few years (about $3.75 billion in 2021, about $2.0 billion in 2022 and about $2.3 billion in 2023), it seems also manageable without taking on additional debt. Summing up: UPS’ balance sheet is not great, but also no reason for concern.

A second aspect that deserves a closer look is the question if the positive growth rates we saw in the last two quarters are rather an outlier or if this is the beginning of a long-lasting shift towards higher growth rates for shipping and higher revenue for UPS.

First of all, we have to assume that many people will return to malls, groceries, and stores when the pandemic is over. But it will probably take at least till the end of 2021 before enough people are vaccinated – assuming the vaccine will prove as effective as results are indicating, and the distribution process will be effective (UPS will probably also play a crucial role). Right now – according to a Deloitte study – 51% of people are anxious about shopping in stores during the holiday season. But only 49% of people will return to pre-COVID-19 shopping behavior when the pandemic is over, and this could indicate that people will continue to spend more money online. This has been the trend in the last few years that accelerated in 2020.

When looking at the top reason for shopping online (instead going to physical stores), avoiding crowds is the number one reason, but there are many other reasons like comfort of shopping from home, free shipping or 24-hour availability that have nothing to do with COVID-19. And this is also indicating that, even when the pandemic is over, there are still a lot of reasons for people to shop online. The market share of ecommerce also grew from 11.0% in 2019 to 14.5% in 2020.

But according to the chart above, ecommerce might lose market shares again in 2021, and the trend towards ecommerce is not necessarily accelerating in the years to come. This is indicating that the pandemic forestalled growth of future years and the high growth rates of 2020 will have to be paid by lower growth in the coming years.

Assuming that a huge part of the people that started buying online in 2020 during the pandemic will continue to do so is a reasonable bet. We can also assume that UPS will, therefore, have a higher freight package volume and increase revenue (and higher growth rates) in the years to come. But betting on similar high growth rates as UPS reported in the last two quarters seems unreasonable.

But even if the trend towards ecommerce will lead to a higher demand for shipping, UPS is not the only player in the market, and it has to compete with other companies. When talking about competition, we first of all have to point out that UPS is pretty well protected by its wide economic moat, which is quite difficult for competitors to overcome. UPS’ wide economic moat basically stems from its dense distribution network that is very hard to duplicate for new competitors as it is time-consuming and expensive (you can look at my last two articles – here and here – where I described the wide economic moat in more detail).

However, we have to look at one new competitor in more detail as it might be a huge threat to UPS – Amazon. I usually don’t get scared when Amazon is moving towards new segments: Target (TGT) in 2017 was one of my best investments, and right now, I am hoping for cheap prices for CVS Health (CVS) once again. However, in this case, I think we should take Amazon seriously. Last year, Amazon ordered 100,000 electric delivery vans to strengthen the company’s last-mile delivery network, and according to Morgan Stanley, Amazon increased the share of deliveries of its own packages from 20% to over 50%. Amazon delivered about 2.5 billion packages last year versus 3 billion carried by FedEx and 4.7 billion by UPS. And Morgan Stanley also estimated that Amazon Logistics will reach a volume of 6.5 billion packages per year by 2022 – exceeding both UPS and FedEx.

These numbers might already show that Amazon is a serious competitor. In addition, it is rather easy for Amazon to attack the economic moat of UPS. Amazon has not only the financial resources to copy the distribution network. Amazon also has about 110 fulfillment centers in the United States, which are a good basis to build up a distribution network. Many other competitors would need a lot of time and money to install a network of strategically located distribution centers. And aside from the already existing distribution centers, Amazon has another huge advantage. The challenge when competing with UPS is the fact that new competitors need to copy an extremely dense network with millions of nodes and even more connections. It is not enough to copy just a small part of the network and focus only on densely populated areas. However, Amazon can do exactly that: Amazon only has to establish a network between the recipients of the packages as the sender is always Amazon and its fulfillment centers. Amazon started by establishing a distribution network in the big cities – New York, for example, and could offer shipping from a fulfillment center that is nearby. For a company like UPS, it doesn’t make much sense to establish a distribution network only in New York as packages can only be sent from New York to New York but to no other city – for a retailer like Amazon, it makes a lot of sense.

And, finally, we have to calculate an intrinsic value for UPS to determine if it is a good investment. At around $100, I called UPS fairly valued, and as the stock is now trading about 60-70% higher, we need to analyze again if that higher price is justified.

I think it is pretty obvious that we should not calculate with revenue growth in the double digits as these high growth rates are clearly a result of the pandemic, and in 2021, growth rates will most likely slow down again. What growth rates are realistic in the years to come? In past calculations, I used a growth rate of 4.5% annually, which is more or less in line with growth rates in the recent past. Considering the shift towards ecommerce and potential long-lasting positive effects from the pandemic, we can assume a growth rate of 5.5% for the years to come – which is in line with long-term revenue CAGR. When using the free cash flow of the last four quarters as basis for our calculation ($6,966 million), we get an intrinsic value of $177.93 making UPS still a bit undervalued.

But we should be careful for several reasons: Margins declined a little bit during the last decade and the intensified competition (and the pressure from Amazon) might also lead to lower margins in the years to come, which would have a negative effect on the bottom line.

The most important aspect, however, is the free cash flow we took as basis. A free cash flow of almost $7 billion is an extremely high amount, and we have to consider that UPS had not only huge FCF fluctuations in the past (in 2019, free cash flow was only $2.3 billion, and in 2017, the free cash flow was even negative). In addition, UPS had only an average free cash flow of $3,471 million during the last ten years and an average free cash flow of $2.7 billion during the last five years. As the high free cash flow is also a result of the good quarterly results of the last two quarters, we should be a little more cautious and assume an FCF between $5 billion and $6 billion as more realistic basis for our calculation. This would lead to an intrinsic value somewhere between $128 and $153 for UPS.

UPS is a stable dividend payer, and at around $100, it was certainly a good investment with a 4% dividend yield. Now, after the latest run, it seems a little pricier, and if UPS is still fairly valued depends a lot on the fact if we really see a long-lasting trend and acceleration of ecommerce growth or if we will return to pre-crisis growth rates after the pandemic is over. It also depends a lot on how much market share Amazon can take from its competitors (like UPS). Overall, I would be a little cautious right now as UPS seems to be overvalued. In my opinion, a pullback to the breakout level (around $125) also seems likely, and I would be patient.

Recent Examples on the Web No one knows if these rapid increases will overshootand push the economy into a recession, causing markets to fall and unemployment.

One risk, O’Leary notes, it that the Fed may overshooton interest rates because the drop in housing prices, which takes 16 to 18 months to be correctly reflected in CPI data, is not being taken into account.

Markets are skittish that the Fed"s actions — which take a while to feed through the system — could overshoot, sending the US economy into a prolonged and deep recession.

These example sentences are selected automatically from various online news sources to reflect current usage of the word "overshoot." Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

Product InformationHow the Chicago School Overshot the Mark is about the rise and recent fall of American antitrust. It is a collection of 15 essays, almost all expressing a deep concern that conservative economic analysis is leading judges and enforcement officials toward an approach that will ultimately harm consumer welfare. For the past 40 years or so, U.S. antitrust has been dominated intellectually by an unusually conservative style of economic analysis. Its advocates, often referred to as The Chicago School, argue that the free market (better than any unelected band of regulators) can do a better job of achieving efficiency and encouraging innovation than intrusive regulation. The cutting edge of Chicago School doctrine originated in academia and was popularized in books by brilliant and innovative law professors like Robert Bork and Richard Posner. Oddly, a response to that kind of conservative doctrine may be put together through collections of scores of articles but until now cannot be found in any one book. This collection of essays is designed in part to remedy that situation. The chapters in this book were written by academics, former law enforcers, private sector defense lawyers, Republicans and Democrats, representatives of the left, right and center. Virtually all agree that antitrust enforcement today is better as a result of conservative analysis, but virtually all also agree that there have been examples of extreme interpretations and misinterpretations of conservative economic theory that have led American antitrust in the wrong direction. The problem is not with conservative economic analysis but with those portions of that analysis that have overshot the mark producing an enforcement approach that is exceptionally generous to the private sector. If the scores of practices that traditionally have been regarded as anticompetitive are ignored, or not subjected to vigorous enforcement, prices will be higher, quality of products lower, and innovation diminished. In the end consumers will pay.

How the Chicago School Overshot the Mark is about the rise and recent fall of American antitrust. It is a collection of 15 essays, almost all expressing a deep concern that conservative economic analysis is leading judges and enforcement officials toward an approach that will ultimately harm consumer welfare.

For the past 40 years or so, U.S. antitrust has been dominated intellectually by an unusually conservative style of economic analysis. Its advocates, often referred to as "The Chicago School," argue that the free market (better than any unelected band of regulators) can do a better job of achieving efficiency and encouraging innovation than intrusive regulation. The cutting edge of Chicago School doctrine originated in academia and was popularized in books by brilliant and innovative law

professors like Robert Bork and Richard Posner. Oddly, a response to that kind of conservative doctrine may be put together through collections of scores of articles but until now cannot be found in any one book. This collection of essays is designed in part to remedy that situation.

The chapters in this book were written by academics, former law enforcers, private sector defense lawyers, Republicans and Democrats, representatives of the left, right and center. Virtually all agree that antitrust enforcement today is better as a result of conservative analysis, but virtually all also agree that there have been examples of extreme interpretations and misinterpretations of conservative economic theory that have led American antitrust in the wrong direction. The problem is not

with conservative economic analysis but with those portions of that analysis that have "overshot the mark" producing an enforcement approach that is exceptionally generous to the private sector. If the scores of practices that traditionally have been regarded as anticompetitive are ignored, or not

Federal Reserve Bank of Dallas President Richard Fisher said the Fed has "overshot the mark" with its stimulus policy, creating an ebullience in credit markets that he likened to the effect of "beer goggles" on college students.

Mr. Fisher also said wage inflation may soon show up in data, leading to price inflation earlier than most economists anticipate. Speaking at a meeting of the Council for Economic Education, a group that promotes financial literacy at the K-through-12 level, in Dallas, Mr. Fisher said the U.S. economy isn"t facing much "inflationary pressure."

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