NIRI holds Global Investor Relations Program in Miami Nov 16-18 #NIRI #ir #miami

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National Investors Relation Institute is holding a Global Investor Relations Program in Miami Nov 16-18. The program is targeting non US companies and assisting them navigate US investment markets. NIRI president  Jeff Morgan sees the program becoming a must do for non US-based IR practitioners.

Miami is usually sunny and warm. Miami is the business gateway to Latin America. Hopefully the outreach programs will also go to Asia and China so we can get investor relations onto one global page. Hong Kong or Shanghai?

George Gutowski writes from a caveat emptor perspective.

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

Lincoln on U.S. one cent

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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”

#NIRI warns membership #occupytheboardroom #OWS $XLF $GS $MS $WFC $C $BAC $JPM

The most recent newsletter for NIRI (National Investor Relations Institute) is sounding the alarm about a web site www.occupytheboardroom.org . They have a point it seems to be a tool to harass senior officers and board members of major financial institutions.

More unfocused street fighting which will not resolve anything. I am beginning to think this is all about anarchy and not changing for the better.

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.

 

 

 

 

 

 

 

 

National Investor Relations Institute meets with FASB #FASB #IR #NIRI

The National Investor Relations Institute or NIRI as it’s usually known as, just recently met with FASB to discuss upcoming accounting changes. This of course will impact the professional practice of investor relations. Good for NIRI and its professional members. The question becomes how will the new accounting rules change financial reporting and investor perception of value.

Savvy investors will have to look at the mosaic of information and see where the thread count is changing and why. I’m sure that NIRI will communicate the changes internally but how will investor relations professionals communicate changes to their investors, especially the small individual investor who does not have the big resources behind them.

Maybe some partnerships with investor oriented associations are called for to help communicate the changes. This will be to NIRI’s advantage. They will want to avoid the accusation of  funny money accounting shenanigans which will almost certainly come about.

Disclosure : George Gutowski writes from a caveat emptor perspective. I support any activity that  provides the marketplace with better clarity and understanding of their investments. I feel sorry for the few investor relations officers who will not be able to communicate FASB changes and get it wrong.

Toys R Us Sham Investor Relations Motions

Toys 'R' Us

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Toys R Us which used to be publicly traded and was gobbled up by private equity in 2005 is still issuing earnings releases and going through the motions of an investor relations exercise. I guess the game is to eventually go to IPO and get investors back into this stock. The problem lies with the poor expalinations. The company is losing money and is having problems. This after six years of being in the repair shop of private equity. Management has not taken any time to talk about why they are losing money and what they are doing about it. The main points dealt with the new refinancings and how much interest they think they will be saving themselves. By the way when you pay LIBOR plus 3% and more you are in deep dodo. So I guess there is you management discussion and analysis.

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.

#NIRI comments on #Whistleblower Rules #InvestorRelations gets Worried

Representative Barney Frank, co-architect of t...

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National Investor Relations Institute (NIRI) issued some takeaways for their membership about the new Whistleblower eco-system that is about to spawn. For those of you who do not know the members of this institute are responsible for maintaining relations with shareholders on behalf of individual publicly traded companies. They are a professional group and are not responsible for promoting or pumping up stock prices.

They sometimes can be caught between a rock and a hard place when other executives do no follow the law and shareholders get screwed. Here are the takeaways.

• Corporate whistleblowers can skip internal systems and go directly to the SEC with their concerns. 

• Whistleblowers can still use internal corporate reporting processes, but may also report their findings to the SEC and still be eligible to collect a reward. Rewards can be as much as 30% of the monetary sanction of $1 million or more. 

• SEC staff has said that high value tips provided to the SEC have gone from less than two dozen per year before Dodd-Frank, to one to three per day now. You should be prepared – a likely byproduct will be the SEC contacting more companies more frequently than in the past. Companies should consider revisiting internal compliance processes and response systems in light of the new rules. IR should certainly be part of that discussion due to the legal framework by which we operate. 

• In general, compliance and internal audit personnel are excluded from whistleblower rules, as well as those with a pre-existing legal or contractual duty to report information to the SEC. 

• Rules go into effect in August 2011. 

• Many expect false positives or erroneous reports made to the SEC due to the new system and the impact will be felt by all involved. 

• Don’t be surprised if there are legislative attempts to change the new rules or if legal challenges are made. Nevertheless, companies should not delay in ensuring they understand the new whistleblower provisions and their implications.

Green Mountain Finance & Audit Committee Disaster

Green Mountain Coffee Roasters

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Green Mountain (GMCR) issued a press release indicating they need to restate their financials going back to 2007. Not very impressive but the company is doing the correct thing.

Where the Green Mountain spin team falls apart is the sequence of events. Green Mountain responded to an SEC investigation initially. Not sure yet how SEC found out or what made Green Mountain light up on the radar but the SEC did it’s job.

The press release spins the sequence differently. Read this snippet from the second paragraph

“As discussed below, these errors were discovered by management during the course of its preparation of the year-end financial statements and audit, as well as during the course of an internal investigation initiated by the audit committee of the Company’s board of directors in light of the previously disclosed inquiry by the staff of the Securities and Exchange Commission’s (“SEC”) Division of Enforcement”

I don’t appreciate the spin. Green Mountain and their auditors Pricewaterhousecooper LLC missed it until they were awakened by the regulators. Now they are covering themselves with desperation credibility.

Who are the directors responsible? Here is the Audit and Finance Committee:

  1. Michael Mardy
  2. Barbara Carlini
  3. William Davis
  4. Jules Del Vecchio

Only Michael Mardy has any financial background. So you have to wonder why the other three are on the committee? Then when you dig around Michael Mardy was previously the CFO of Green Mountain. Now he has director’s responsibility over the area he used to manage. This committee was poorly constructed. Not a surprise that they experienced regulatory problems.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

InterOil Soro’s vs Whitney Tilson

InterOil

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InterOil (IOC) is exploring for natural gas in Papua New Guinea. Morgan Stanley has just successfully raised $266 million of much-needed capital and eliminated short-term liquidity issues. George Soros has been a believer and recently disclosed he owns 12% of IOC. SEC documents indicated this is George Soro’s third biggest holding.

Whitney Tilson is a bear who manages a hedge fund called T2 partners (www.tapartnersllc.com) hates the play. He insists the reserve valuations are a fraction of what is being reported and therefore feels the stock is overvalued.

InterOil Chief Executive Officer Phil Mulacek in a very recent quarterly earnings release commented

 “Our delineation drilling results further demonstrate the value of our reservoir at Antelope 2.”

 The headline in the press release also included this tidbit.

“The Antelope 2 horizontal well confirmed a higher condensate-to-natural gas ratio of 24-27.7 barrels per million cubic feet of natural gas, approximately 60% higher than observed at the top of the reservoir.  The horizontal well also demonstrated higher porosity deeper in the reservoir than previously modelled”

DealBook reports that Whitney Tilson in a Nov 6 blast email to 2000 supposed clients said

This is a company that has NO RESERVES — not proven, probable or even possible; just a ‘contingent resource estimate’ from a firm that InterOil paid, after shopping among firms — and has NEVER delivered on its countless promises of huge natural resource finds in over 200 press releases over more than 10 years. Sure, there’s gas there — this isn’t Bre-X — but we think there’s only a tiny fraction of what IOC claims.”

The difference in opinion is fundamental. Whitney Tilson does not believe in the engineering reports. What information does he have to back up his claim? Other than just disputing management why not put your cards on the table? Whitney if you can bust open InterOil your reputation is secure forever.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

Apple Board Governance Risks

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Apple (AAPL) finally filled a vacant board position. Today they announce the appointment of former Northrop Grumman Corp. Chairman and Chief Executive Ronald Sugar to its board. The move grows the panel to seven and comes following March’s death of Jerome York.

Jerome York passed away eight months ago and it has taken this long for  Steve Jobs to get around to finding a replacement. The board is now seven individuals. I assume Jerome York’s stock options are all priced over $300 @ share. The board’s size is inadequately small. For a company this size seven directors is not enough to discharge the full spectrum of governance responsibilities.

This will eventually prove to be the Achilles heel of Apple. They do not have the bench strength to deal with problems and crisis.

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.

Home Depot Disclosure Issues

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Home Depot (HD) issued a Q3 earnings release followed by a conference call. Compare the two closely. The earnings release is Reg FD challenged. The conference call contains so much more information investors should wonder if the two documents refer to the same company. The board of directors needs to consider its investor relations and compliance practices because the playing field is not level.

Here are the specific points dealt with at length in the conference call which were not in the earnings release. the conference call transcript is available at Seeking Alpha http://seekingalpha.com/tag/transcripts?source=headtabs

 Have a read and see if you agree. The selected disclosure items are

  1. Regional comparisons
  2. Specific product comparisons
  3. Numeric Info on comparables per month
  4. Analysis of gross margin
  5. Complete assessment of balance sheet
  6. Complete assessment of share repurchase program   

Disclosure: George Gutowski writes from a caveat emptor perspective. I hold no positions in stocks mentioned in this post.