Buffett Sokol Broken Dynamic Guess the Successor#Sokol #Buffett

Sokol has attempted to resign several times in recent past. Buffett keeps talking him out of it. Warren when a guy keeps trying to quit and when this guy is independently wealthy and does not need the pay cheque you have a broken dynamic. The rich employee is no longer sufficiently engaged.

Warren Buffett made a big mistake in constantly talking Sokol out of it. Was Buffett playing a public game of guess the successor? Quite the error in judgement.

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. 

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Buffett’s Radar Broken Sokol’s Perfect Integrity#Sokol #Buffett #Lubrizol

David Sokol of MidAmerican Energy at Berkshire...

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Sokol placed his own and family money into Lubrizol (NYSE:LZ) and profited. How many times in your working life has your boss looked at you and asked “Would you put your own money into this?” This supposed gut question has been asked a million times and is designed to ferret out true conviction.

Sokol is not stupid. He found something that eventually passed muster. Buffett’s radar was not working. At the same time Buffett  is walking around with an elephant gun and itchy finger. 

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.

Berkshire Strategic Confusion #Buffett #Sokol #Lubrizol

Warren Buffett

Berkshire Hathaway (NYSE:BRK.A; NYSE:BRK.B) $BRK.A $BRK.B has demonstrated strategic confusion. Sokol the heir apparent to Warren Buffett claims there was a 5% chance that Buffett was going to go for the deal. Warren Buffett is making public comments about an itchy finger and an elephant gun.

Were Buffett and Sokol on the same page? What did Buffett hear in Sokol’s report after the first meeting to justify a complete 180 turn. Must have been something real good to make the old boy turn on his heel and write the big cheque. How surprised was Sokol when Buffett finally went for it?

Do Buffett executives understand what is expected? Or does Buffett keep the cards close to his vest and keep them all guessing?

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. 

Acuity Brands $AYI Verbose Explaination Indicates Nadel is Insecure?

Acuity Brands (NYSE:AYI) $AYI reported Q2 results. The management comments attributable to Chairman Nadel appear verbose and meandering. The earnings release starts off with dense financial data that would be better presented in simple point form making management look focused. But then read directly attributable points from Chairman Nadel.

“We continue to experience inflationary cost pressures resulting from increases in commodity prices”   Duhh

Sunoptics extends our capabilities in managing the visual environment by using natural daylight, while also providing opportunities to leverage our technology expertise and broad market access, including integration with other energy-efficient technologies such as our LED-based luminaires and intelligent lighting control solutions.”  The verbose nature of the statement makes the chairman seem insecure, forcing him to constantly explain himself.

We believe the continued execution of our long-term strategy to expand and leverage our product and solutions portfolio, coupled with our industry-leading market presence and our considerable financial strength to allow us to capitalize on market-growth opportunities, will enable us to outperform the markets”  Again the need to over explain is a classic signal of insecurity.

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.

Apollo Group $APOL Tiptoes Through Disclosure With Chairman Greg Cappelli

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Apollo Group (NYSE:APOL) $APOL really knows how to tip toe through its Q2 disclosure. Apollo Group Co-Chief Executive Officer and Apollo Global Chairman Greg Cappelli chose his words carefully in light of past accusations. Here are a few tidbits which make you wonder if he learnt his lesson or did he just get caught and the lawyers made him say it.

“…ensure that we enroll students who we believe have a greater likelihood to succeed in our programs” Greg what were you doing in the past just cashing a few cheques from naive young adults who were confused about their real options.

….expand student protections” Clearly must be referring to something legal because your average investor will look at that phrase and have difficulty understanding the connection to wealth creation.

“….to enhance the student experience” Student experience: whats that all about? The student is there to pick up skills. That’s your core mission. Wonder if the Marine Corps is looking for ways to expand their recruit experience. Wonder if the Marine Corps even thinks like that?

It’s a long road to redemption. To thine self be true.

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.

Accenture PLC Balance Sheet Confusion

Image representing Accenture as depicted in Cr...

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Accenture PLC (NYSE:ACN) reported earnings and watched the buy on rumour sell on news syndrome kick in. In any event this is a services company which lives off its cash flow. So lets take a look at a few balance sheet items to determine just how sturdy the house of cards really is.

Cash and equivalents down ever so slightly to $4.7 billion. Receivables from blue chip customers clocked in at a robust $3.1 Billion. Should be turned into cash very quickly. The cash position is roughly equal to eight quarters of after tax net income. Why do we need so much cash in the business?

Acenture has two items which give pause to ponder. Other non current assets of $2.8 billion and other non current liabilities of $3.2 billion. No discussion or commmentary provided. Herein lie the potential Black Swan events for Accenture. Unexplained and ignored waiting for the law of unintended consequences to strike.

Disclsoure: “George Gutowski” writes from a “Caveat Emptor Perspective” . I hold no positions in stocks mentioned in this post. I have no intentions to initiate new positions within the next 72 hours. 

Darden Restaurants Self Canabilizes

The company's former logo, used until 2009

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Darden Restaurants (NYSE:DRI) reported vanilla style and wove a story about sales increases and comparable same store numbers. Almost boring. Keep reading until you reach the fundamental balance sheet numbers.

Cash is down dramatically. They are using valuable cash resources to repay long-term debt and to repurchase shares. Debt is contractual and reducing debt is usually a good idea.

YTD 9 month earnings are $338 million. $276 million or 82% of net earnings are being used to repurchase shares. $132 million or 39% of net earning were used for dividends. Then there are contractual debt obligations.

The company is over returning capital to the tune of 121% of net earnings. No comment from management about the strategy. When management is quiet as a mouse you know they are not proud of it. Clearly not a sustainable strategy even in the short-term. By the way they have a portfolio of new specialty restaurants which need development and capital. Currently they are on a starvation diet.

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.