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Climbing The Financial Wall of Worry

Yahoo’s Scott Thompson Open to Lawsuit from Stonehill College $YHOO

Y from the Yahoo logo

Y from the Yahoo logo (Photo credit: Wikipedia)

By now everyone must have read something about the Yahoo (Nasdaq:YHOO) controversy as to whether Scott Thompson embellished his academic credentials and if Yahoo inadvertently became the victim of an intellectual fraud.  Daniel Loeb, CEO of Third Point, is suggesting he will start a lawsuit at high-noon EDT today if the board does not terminates Scott Thompson and the former head hunter who stick handled the executive search and is reputedly being accused of a very similar set of circumstances. Much fire and brimstone. Third Point which was already at the ramparts cannot believe their good luck in finding such cause. They have been able to manufacture righteousness and much serious chin scratching over the issue.

The investment world is preparing for a gladiatorial confrontation pitting doofusses as described by Carol Bartz admittedly in a highly emotional encounter which some suggest was a moment of clarity against a rough tough hedge fund with two quivering guinea pigs in the middle. but that will not be the main event. The truly aggrieved party is Stonehill College which is billed as a Roman Catholic College.

Academic institutions have nothing but their reputations. Claiming to have earned a designation when it ain’t so is an assault on the brand. If anyone can claim successful completion of rigorous academic standards and then found to be wanting what of the alumni who did meet the standards? What of the current students struggling with the course load and paying their dues? What of future students who want to aspire? They have been robbed irregardless of Yahoo’s response or Third Points counter moves.

I can see perhaps encourage a college to pursue civil remedies against someone who inadvertently postures with credentials which were not rightly earned. I can see some alumni who may want to protect their credentials start civil actions , take the judicial winnings and set up scholarships for deserving students.

So those of you with falsified resumes and manufactured academic credentials you should be tracked like animals and made to pay. In this case Yahoo if they cannot shake off culpability are probably good for a say $25 million dollar settlement or some such traffic ticket.

George Gutowski writes from a caveat emptor perspective.

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May 7, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Investments, Shareholder Activist, Volatility, Wall of Worry | , , , , | Leave a Comment

Chesapeake Energy Update and Correction. What Does Step Down really Mean! Investors Still Screwed $CHK

Image representing Edelman as depicted in Crun...

Image via CrunchBase

Chesapeake Energy

Chesapeake Energy (Photo credit: Wikipedia)

Numerous readers including David J. Chamberlin Executive Vice President / General Manager, Dallas for Edelman who I presume is engaged by Chesapeake (NYSE:CHK) have pointed out that Aubrey McClendon did not resign as the CEO but he did step down as Chairman. In my earlier post I wrote “The recent resignation of Aubrey K. McClendon – Chairman and CEO will not extinguish the fire storm`. The reader comments are correct; Aubrey K McClendon did not resign as CEO. My apologies about a technical issue which may beg the real question.

Aubrey K McClendon also did not step down as CEO. But he did step down as Chairman. So what does step down really mean! The public relations guys see a really big difference. Step down has a softer less harsh connotation than such words as resigned, relieved, pushed out, fired, dismissed, replaced, disciplined or god forbid terminated.

Step down does not adequately address the issue of destroyed shareholder value. Mid March investors valued the company at a few pennies over $25.50. The close on May 3, 2012 $17.19 which was up on the day. That`s just over $8 per share loss! Now that`s a step down. Investors are still wondering if there are more step downs to follow.

But let’s be clear about the facts. Aubrey K McClendon is currently the CEO. The board of directors seems to be OK with Aubrey K McClendon staying on as CEO.

I also still stand by the gist of my earlier post about when you should consider investing in Chesapeake. Mr Chamberlin I hope your OK with this clarification.

Oh by the way Mr Chamberlin of Edelman do you have any comments about Chesapeake confirming a SEC Informal Inquiry. The SEC was careful to point out an informal inquiry does not mean any securities laws were broken or violated. But they have requested that both the company and Mr McClendon retain certain documents. Hey no problem as he is still the CEO.

George Gutowski writes from a caveat emptor perspective.

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May 3, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Disclosure, Insider Trading, Investments, Investor Relations, Reg FD, Stocks, Value Investing, Volatility, Wall of Worry | , , , | Comments Off

Chesapeake Is it the New Enron? Value Investor Considerations $CHK

Chesapeake Energy

Chesapeake Energy (Photo credit: Wikipedia)

Chesapeake Energy Corp (CHK) is in the market for a new boss. We’ve all heard the twisted conflicted governance challenged story. It’s not good. Calls to replace the entire board are only just starting up. Shareholder class action lawsuits are gearing up. My god the world is coming to an end. So is this the ultimate value investor play. Value investing is a buy ugly sell pretty formula. You have to have courage and correct analysis.

Well the price is down. The corporate governance story has destroyed shareholder value. The company is a huge gas play and the market price for gas is down. Very down. So isn’t this the time to buy. Buy low sell high. That’s the formula isn’t it.  Well the price of gas is historically low. We do have a domestic surplus and last winter was very mild so the consumer home owner did not come through as needed. That issue is the same for dozens of other gas opportunities. If you are patient you can make the cycle work for you.

So we default to the governance storm. The recent resignation of Aubrey K. McClendon - Chairman and CEO will not extinguish the fire storm. Who would want to take the job. To many ghosts and skeletons in the closet. So you can go through the executive search which is time-consuming and expensive to come up with what. My thoughts are if a recruiter calls you for the job go to the interview. It’ll be one of the most interesting interviews you’ll ever have. How will the search be conducted? Who makes the ultimate decision? The shareholders will be wanting pristine pureness. Will the candidate fit into the corporate culture or will he need to reshape it. Reshaping cultures is more difficult than finding oil and gas. Another good old boy will not do. By the way the board needs to be revamped. They have their finger prints on this problem as well.

Then you have to consider corporate momentum. The governance issue will be the mother of distractions. Instead of exploiting oil and gas the senior leadership team will be swatting away pesky governance flies. They will not be working full-time on maximizing shareholder wealth. So if you are looking at Chesapeake and wanting to buy when the storm clouds are the darkest, wait up. Do not click the buy button yet.

My personal prediction will be to bring in a one year neutral caretaker type to help stabilize. He should have a personal fixation about opening closet doors and checking out the contents. If we see the caretaker then it’s time to consider being a value investor. If we see someone who fits in with the corporate culture well lets just say shareholder wealth will not be maximized.

George Gutowski writes from a caveat emptor perspective.

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May 2, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Disclosure, Insider Trading, Investments, Shareholder Litigation, Stocks, Volatility, Wall of Worry | , , | 1 Comment

NYSE Euronext Board of Directors Gets Bitch Slapped $NYX #governanace

NYSE Euronext Logo

NYSE Euronext Logo (Photo credit: Wikipedia)

NYSE Euronext (NYSE:NYX) watched one of their members of the Board go down in flames.  Ricardo Salgado tendered his resignation because he did not receive a majority of votes. As per by-laws he had to walk the plank and tender his resignation. Now as per common sense did he or the NYSE Euronext not have a sense of where his support stood. Maybe not because he essentially went kamikaze and went down in flames.

Apparently there is some concern about his ability to commit time to NYSE Euronext activities. Apparently he did not attend too many board meetings so the investors had to ask why should we vote for him. Good question. The nominations process which is controlled by the board and management could not see their way through the arithmetic of failure and put up his nomination anyway. OK so he must be a smart guy and you know what NYSE Euronext executives are not a bunch of dummies. So why was he nominated, why did he accept the nomination and why was he defeated. Read the press release for a few clues.

In thanking him NYSE-Euronext remarked on his twenty years of contribution. so like he is connected and can make stuff happen just like the godfather. The next sentence is crucial. and I quote “ However, we completely understand the business priorities and his leadership role in the Portuguese financial community which requires his full attention, and we wish him continued success.”

Leadership in Portugal which is a financial basket case is an interesting perspective. The whole euro-crisis has more back room maneuvering than front page headlines. Portugal of course is in need of help and Ricardo Salgado is working on it. Institutional shareholders who have the numbers in a proxy battle gave him the thumbs down. Now this is a time where I wish I worked mornings at the Fed Reserve and afternoons at the CIA. (Probably best job combo in whole world) and we could find out the true rationale for agreeing to stand re-election and the institutions finding it too distasteful and voting no.

So here is my take on it. NYSE Euronext made a long term decision and said lets keep this guy. He has been good for/to us in the past and we expect more of the same in the future. Proxy shareholders who think about the board look at his current overwhelming involvement in Euro zone financial problems and throw him over board. Short term decision A+. Medium to long term F-.

Is the NYSE Euronext so sensitive to one board member? Well no and that’s good. But it’s the mix that eventually counts. Short term thinking with board selections is not good. So the big gumba shareholders filling in the proxy cards and directors votes. Ya blew it.

To those of you blaming Euro games it will not matter.

George Gutowski writes from a caveat emptor perspective.

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April 27, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Due Diligence, Earnings Forecasts & Guidance, Investments, Shareholder Activist, Stocks, Take Over Targets, Value Investing, Volatility, Wall of Worry | , | Comments Off

Obituary for Common Sense #commonsense

An Obituary printed in the London Times…..Absolutely Dead Brilliant !!
Today we mourn the passing of a beloved old friend, Common Sense , who has been with us for many years. No one knows for sure how old he was, since his birth records were long ago lost in bureaucratic red … … tape. He will be remembered as having cultivated such valuable lessons as: – Knowing when to come in out of the rain; – Why the early bird gets the worm; – Life isn’t always fair; – And maybe it was my fault. Common Sense lived by simple, sound financial policies (don’t spend more than you can earn) and reliable strategies (adults, not children, are in charge).
His health began to deteriorate rapidly when well-intentioned but overbearing regulations were set in place. Reports of a 6-year-old boy charged with sexual harassment for kissing a classmate; teens suspended from school for using mouthwash after lunch; and a teacher fired for reprimanding an unruly student, only worsened his condition.
Common Sense lost ground when parents attacked teachers for doing the job that they themselves had failed to do in disciplining their unruly children. It declined even further when schools were required to get parental consent to administer sun lotion or an aspirin to a student; but could not inform parents when a student became pregnant and wanted to have an abortion.
Common Sense lost the will to live as the churches became businesses; and criminals received better treatment than their victims. Common Sense took a beating when you couldn’t defend yourself from a burglar in your own home and the burglar could sue you for assault. Common Sense finally gave up the will to live, after a woman failed to realize that a steaming cup of coffee was hot. She spilled a little in her lap, and was promptly awarded a huge settlement.
Common Sense was preceded in death, -by his parents, Truth and Trust, -by his wife, Discretion, -by his daughter, Responsibility, -and by his son, Reason. He is survived by his 5 stepbrothers; – I Know My Rights – I Want It Now – Someone Else Is To Blame – I’m A Victim – Pay me for Doing Nothing
Not many attended his funeral because so few realized he was gone. If you remember him, pass this on. If not, join the majority and do nothing.
George Gutowski writes from a caveat emptor perspective.

March 29, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Disclosure, Earnings Forecasts & Guidance, Financial Engineering, Insider Trading, Investments, Investor Education, politics, Short Interest, Stocks, Take Over Targets, Value Investing, Volatility, Wall of Worry | Comments Off

Carnival Cruise Line hides costs of Costa Concordia disaster in SEC annual report filing. $CCL

Costa Concordia {Malta 2008}

Image by Marc-John Photographic via Flickr

Carnival Corporation (NYSE:CCL) released their annual report and buried the projected costs of the Costa Concordia disaster. close scrutiny of the SEC documents indicates they will take a hit between $155-million  and $175-million against fiscal 2012 net income because of the wreck of the Costa Concordia. They then make the comment that they have significantly curtailed marketing expenses since the untimely disaster. The last juicy tidbit is that management does not expect any long-term consequences from the disaster.

The manner of disclosure while technically legal is not investor friendly. Carnival management clearly wants to wipe the dodo off their shoes. Corporate management psychologically does not believe this is their fault and they want to position themselves in a no-fault zone. Very similar to the Captain who abandoned ship before passengers and crew were completely evacuated. Just do not take responsibility. The corporate culture does not reward responsibility or accountability; or so it seems.

The marketing spend curtailment could not possibly be a significant offset against the losses. If anything they will need to spend significant amounts to repair their brand. As to no long-term effects, think lawsuits, think about the problems involved in removing fuel from an unstable wreck and then think about the visuals of a partially sunken vessel.

This is a black swan event for Carnival. Carnival needs to call it for what it is.

George Gutowski writes from a caveat emptor perspective.

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January 30, 2012 Posted by | Black Swans, Caveat Emptor Perspective, Class Action, Disclosure, Earnings Forecasts & Guidance, Investments, Reg FD, Shareholder Litigation, Wall of Worry | , , | Comments Off

#NIRI cautions on safe harbour wording. How investor relations can get into big trouble.

Lincoln on U.S. one cent

Image via Wikipedia

National Investor Relations Institute has cautioned its membership about the use of safe harbour wording. The wording is mundane and often ignored by both investors and publicly traded companies. Some sarcastically compare the wording to the stuff on cigarette packages that warns about cancer. 

Not

NIRI refers their readers to the Coinstar case. Cooley LLP in a practice brief warns IR practitioners about the issues and concludes with this sage piece of advice:

“…. In addition, companies must be alert to the need to change disclosure language when the nature of the risks changes.

Finally, when making forward-looking statements, it is best to avoid “puffing” optimism, vague statements or hyperbole. Rather, companies should focus on hard data and pay strict adherence to the requirements of the safe harbor for maximum protection.”

Investors need to be aware of what investor relations needs to do. Investing is a risk business. However even the best IR practitioner can slip up. So read all corporate communications from a caveat emptor perspective”

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November 9, 2011 Posted by | Class Action, Disclosure, Due Diligence, Earnings Forecasts & Guidance, Investments, Investor Education, Investor Relations, NIRI, Reg FD, Shareholder Litigation, Stocks, Value Investing | , , , , | 3 Comments

#Timhortons double double troubles $THI #occupytimmies $RXI $IYK $KXI $AXDI $ AXSL #WTF

Tim Hortons

Tim Hortons (NYSE:THI) long a successful purveyor of coffee and donuts has a silly little problem. Apparently one of their franchisee’s asked a lesbian couple to leave after another very straight-laced customer complained when she saw them kissing on the premises which means in public. The manager complied and asked them to leave. Now a lesbian group is going to protest. The manager did not get kissed but probably could use a hug.

Tim Hortons with several outlets in NYC Time Square area  has executed a fairly successful expansion in the North East. They are famous for the double double which usually means two sugars and two creams. You occasionally hear someone ordering a triple triple.

Just goes to show you how hard it is to maintain your brand. The incident is supposed to have occurred in Chatham Ontario which is very close to Michigan.

Corporate exec’s are moaning over the new guidelines they surely will have to issue. The stock is trading near its 52 week high and there is more important work to be done.

Disclosure: George Gutowski writes from a caveat emptor perspective. I usually drink my coffee black and my espresso double, twist of lemon and no sugar. I do not own any positions in any stocks mentioned in this post. I do not have any plans to initiate new positions within the next 72 hours. I will have coffee tomorrow. There is an excellent chance it will be a Tim Hortons.

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October 27, 2011 Posted by | Class Action, Investments, Stocks | , | Comments Off

$RIMM offers free Apps. Read about clever enterprise strategy in play. #apps #smartphone

Image representing Research In Motion as depic...

Image via CrunchBase

Research in Motion (Nasdaq:RIMM) is offering free apps to individual users. They are also offering free tech support to enterprises customers. Apologies are so manic-depressive. The real trick is to not have a repeat problem. Enterprise customers who use the tech support will hopefully shut up internally about the Blackberry problems.

Blackberry needs to win back their approval and support. If your internal IT people keep referring to Blackberry as that sh*t product you will eventually switch.

Not much communication on what the costs are moving forward or what the costs are looking backward. Too much stone walling. The Carl Icahn attention chills senior officers so you hunker down and say as little as possible.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hath not positions in stocks mentioned in this post. I hath not plans to initiate new positions within the next 72 hours. 

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October 17, 2011 Posted by | Class Action, Disclosure, Earnings Forecasts & Guidance, Reg FD, Stocks | , , , | Comments Off

Will Carl Icahn screw up $RIMM take over offers #carlicahn #blackberry #iPhone

The market is rife with take over rumours. Will Research in Motion (Nasdaq:RIMM) be taken over by someone? Now we have Carl Icahn curled up in the corner waiting and watching. Can he talk out of both sides of his mouth a the same time. First message RIMM needs to pick it up. Yadda yadda. Next message to those considering a take over. What are you kidding? Do you know what this is all worth? You have to pay more. Carl Icahn will throw a monkey wrench into the works. San he be sued for preventing shareholder wealth from being maximized.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.

October 4, 2011 Posted by | Class Action, Disclosure, Insider Trading, Investments, Shareholder Activist, Stocks | , , , | 2 Comments

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