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Consider two companies . Dominant Widgets, the leader in its industry, turns 20 cents of each sales dollar into operating profit. Laggard Widgets, the No. 5 player, has an operating margin of just six cents on the dollar. Assuming you must buy and hold shares of one of them, which should you pick?

History says pick the laggard.

“There is no more important proposition in economic theory than that, under competition, the rate of return on investment tends toward equality in all industries,” wrote Nobel economist George Stigler in 1963. In other words, the profitability of companies tends to revert toward industry averages over long time periods as the most successful companies attract imitators and the least successful companies either fail or are forced to improve.

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Email marketing firm Epsilon had the unfortunate circumstance of being hacked this weekend. Although, the hacker has yet to be identified it is believed that this is the work of one person.

Earlier today, reported about the breach highlighting Capital One as the main victim. Since the day has progressed, more companies have come forward saying they too have been affected by the breach.

Companies Affected by the Epsilon Email Breach

The scope of companies affected ranges from banks to grocery stores, so far the list of financial institutions includes:

• Capital One
• JPMorgan Chase & Co.
• Citigroup Inc.

If you do not see your bank here you are not completely off the hook considering companies like; Best Buy, TiVo, Walgreens, Home Shopping Network, Marriot Rewards, Kroger, Brookstone, Ritz-Carlton and The College Board have all sent out warning emails as well.

Epsilon Press Release

Texas-based company Epsilon released a statement on April 1 saying:

“On March 30th, an incident was detected where a subset of Epsilon clients’ customer data were exposed by an unauthorized entry into Epsilon’s email system. The i

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Tags: Email, Email Breach

Companies have gotten stingier with dividends in recent decades, but they’ve grown more generous with share repurchases. There’s just one problem for investors. For the stock market as a whole, repurchases might be largely a mirage.

“Most buybacks are phony,” wrote Rob Arnott, former editor of Financial Analysts Journal and founder of investment firm Research Affiliates, in a recent email exchange. “If management redeems stock options and the company then buys back the same amount of shares, this is management compensation, not a buyback.”

Arnott constructed an 85-year history of U.S. stock market dilution by comparing the rate at which companies issue shares, including through public offerings and options that are converted to shares, with the rate of repurchases.

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Tags: Stock, Stock Buybacks