In Search of a Cash Bonanza

High gas prices. High food prices. Slow economy. Job cuts. Our economy's health is quickly heading downhill, from under the weather to downright Amy Winehouse.

OK, so it's not that bad yet, but it's certainly not a good picture.

It's anybody's guess when broader business conditions will pick up: The housing market continues to provide a huge overhang for both consumers and financial companies, while oil prices have been astonishingly stubborn. So hoping something will trigger stocks in the near term is probably not our best bet.

However, as BusinessWeek pointed out back in February, Moody's (NYSE: MCO  ) calculated that there is more than $1.6 trillion sitting on the balance sheets of non-financial U.S. companies. Why should we care about this? Well, with falling asset prices, it seems like a perfect time for corporations to put this massive cash hoard to work by either reinvesting in the business or making deals via mergers and acquisitions. And for those companies whose stock prices have declined a lot, big share buybacks could create shareholder value.

Unfortunately, it seems to be harder and harder to get some management teams to part with a company's cash, and that's not good news for shareholders. While it might be comforting to see that the company that you've invested in is sitting on a massive pile of cash, non-financial companies are not in the business of investing free cash, so this money typically earns terrible returns. A company like Microsoft (Nasdaq: MSFT  ) , for instance, whose business is software, should not be hanging onto the amount that it does -- and the fact that it does is hurting its shareholders.

So who are some of these Scrooges? Here are a few that top the charts in terms of net cash (cash and short-term investments, less debt):

  • ExxonMobil (NYSE: XOM  ) -- $31.4 billion
  • Microsoft -- $24.0 billion
  • Apple (Nasdaq: AAPL  ) -- $19.4 billion
  • Cisco (Nasdaq: CSCO  ) -- $17.5 billion
  • Google (Nasdaq: GOOG  ) -- $12.1 billion

But the total amount of cash only tells part of the story. Here are a few of the companies that top the charts in terms of net cash on hand as a percentage of their market cap.

  • Ingersoll-Rand -- $2.6 billion in net cash, or 24.6% of market cap
  • Electronic Arts -- $3.0 billion in net cash, or 20.5% of market cap
  • Sun Microsystems (Nasdaq: JAVA  ) -- $1.8 billion in net cash, or 19.3% of market cap
  • BMC Software -- $1.3 billion in net cash, or 19% of market cap
  • Mirant -- $1.6 billion in net cash, or 18.8% of market cap

In the Motley Fool's CAPS community, only Ingersoll-Rand has been awarded five stars -- the highest rating -- though Apple, Cisco, Mirant, and Exxon each carry four-star ratings. So it seems these investors think we have a pretty good collection of businesses here. Now if we could just get their management teams to unlock those coffers, we might really see some smiling investors.

More CAPS Foolishness:

Microsoft and Moody's are Motley Fool Inside Value picks. Google is a  Rule Breakers recommendation. Moody's, Electronic Arts, and Apple are  Stock Advisor recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy has never once been caught with its pants down. Of course, it doesn't actually wear pants …


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