United Health Stutters and Double Steps

United Health Group (UNH) is holding its investor conference somewhere in New York. Dow Jones wire services filed a report at 12:31 ET saying that United Health sees meaningful earnings growth in 2012. The company has previously said 2011 will not look so good. This is earnings guidance without press release.

In the Dow Jones article by Dinah Wisenberg Brin, she claims guidance was provided at the investor meeting. The executives are giving a very meaningful conference. They are relying on coverage of the conference to convey their message.

United Health Executives need a good basic tutorial in Reg FD. The trick is to provide wide dissemination. The corporate website which is supposedly providing data www.unitedhealthgroup.com only has 2010 and 2011 numbers. Dinah Wisenberg Brin quotes  United Health President and Chief Executive Officer Stephen Hemsley as saying  “… the company expects “meaningful organic earnings growth” in 2012 and beyond.”

The article further points out “Chief Financial Officer G. Mike Mikan described 2011 as a year in which United Health will reset the performance baseline for many of its businesses.” But apparently he held up at 2011.

Stephen please call your lawyer and then the investor relations group. You need to issue a press release and skate onside with Reg FD.

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

United Health Group New York Investor Conference

Location map United States Manhattan

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United Health Group (UNH) issued a press release today announcing tomorrow’s investor conference in New York. New York is a big place and they did not specify any details. I’m gonna guess it will be at a hotel in Manhattan. But that still leaves a lot of options open. But hey it starts at 07:30 ET. Two hours before market open if you know what I mean?

The announcement was issued the day before. So was there an invite list that was worked well in advance? When would the average investor become aware that important insights would be available? Not exactly an equal opportunity investment. But all the right people probably knew about the event well in advance.

The 8K indicates that starting at 07:30 “a hands-on review of certain of the Company’s products and technologies, followed by management presentations and question and answer sessions.” will be the order of the day.

The press release which was appended to the 8K provides the surprising information that an audio webcast of the conference will be provided but “The informal product and technology review will not be webcast”

The press release promises ” The meeting will begin with a hands-on review of UnitedHealth Group products and technologies, and move to presentations from a variety of senior leaders who will discuss the Company’s performance and outlook, including reviewing business trends and specific initiatives related to its various business units.”

The opportunity for selective disclosure is huge. Some will have access to information sooner than others. It will be very interesting to see what the stock does tomorrow. This certainly is not a level playing field.

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

Insider Trading Equals Industrial Espionage

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Federal authorities arrested Don Chu, an executive in the employ of Primary Global Research, an expert networking firm, on insider trading charges. They picked him up on Wednesday very early in the morning because he was booked to leave for Taiwan on Sunday.

Primary Global research seems to be a clearing house for so-called expert opinions. So far they seem to be operating domestically. The line between expert opinion and industrial espionage seems very blurred. While you have to applaud current enforcement moves by the Federal Government, will this so-called expert opinion business just move off shore where the FBI has no jurisdiction.

Disclosure: George Gutowski writes from a caveat emptor perspective. He holds no position in stocks mentioned in this post.

Citigroup Goes Taliban on Larry Hagman


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Citigroup (C) is fighting tooth and nail against Larry Hagman. The amounts are relatively small for Citigroup so why let the battle become a public relations black eye?

The message to investors is “Even if we screw you we will continue to fight you tooth and nail.” Citigroup lost the arbitration. Larry Hagman was in the right. Citigroup seems prepared to fight forever even when closure is obvious to everyone.

Citigroup is setting the psychological landscape for future clients. How many wealthy clients at Citigroup are rethinking their relationship. 

Can you see Larry Hagman as a poster child spokes person for shareholder and investor rights. You can hear the theme music now. 

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

New York Times & CNBC

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Just some out loud speculation about New York Times (NYT) and CNBC which is still owned by GE (GE). Andrew Ross Sorkin seems to be a regular on an incredibly early morning called Squawk Box. CNBC  may or may not be so cozy with the Wall St Journal now that Rupert Murdoch News Corp (NEWS) owes them.

Reading the tea leaves and trying to predict the future is always difficult. Will Andrew Ross Sorkin leverage his brand and use Deal Book as a platform? Will NY Times be able to tap into news gathering from CNBC? NY Times as a print operation will eventually crash and burn. Are they fumbling toward a digital solution? Who is on first?

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

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.

Heinz Is A Foreign Company

Organic Heinz Tomato Ketchup 2

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Heinz (HNZ) reported Q1 earnings. For the quarter 62% of sales were from outside the United States according to. Meaning 62% of the topline is in a currency other than US Dollar. Heinz considers itself a Pittsburgh headquartered company. Should the investor continue to be happy with a guaranteed foreign exchange risk of foreign earning negatively impacting an American dollar denominated bottom line. 

Chairman, President and CEO William R. Johnson says ” Emerging Markets are driving our growth this year and are on track to generate at least 20% of the Company’s total sales by 2013.”

If you want to take foreign exchange exposure buy currencies. If you are interested in consumer foods buy stocks like Heinz. Heinz needs a way to end the distraction of foreign exchange. The currency fluctuations are eroding shareholder wealth not enhancing.  

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

InterOil Soro’s vs Whitney Tilson


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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.