May 6, 2019

A big problem at 2019's Milken Conference: There's too much cash

One big takeaway from this year's Milken conference: attendees were obsessing about the outsized cash environment.

Why it matters: Too much cash is never a bad thing, but it's disrupting norms.

What they're saying:

  • Startups are putting off IPOs, thanks to big capital raises on the private side. "The amount of funding in the private markets has been greater each year. These companies in effect are getting all the capital they need privately. Whereas before they would go public," Dan Levitan, co-founder of venture capital firm Maveron, told Axios' Dan Primack on stage.
  • Companies are flush with cash, but unloading their cash pile via buybacks has become more controversial. Booking Holdings CEO Glenn Fogel told me: "There are some people who believe that companies should be restricted from using their capital to buy back their shares. I don't understand the logic on that at all."

The intrigue: Often these conversations were happening as attendees debated the whether or not capitalism was working.

  • One example: At the final session of the conference, Ray Dalio questioned whether capitalism was "producing the outcome" of shared prosperity and cited stagnant income per capita.

Meantime, Carter Lyons of investment firm Two Sigma said on a panel that his biggest worry was the impact that growing populism and proposals like "financial transaction taxes" could have on liquidity in public or private markets. That could cause a lot of disruption in the short or long term, Lyons said.

Go deeper: The Milken Conference's diversity problem

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