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.

Home Depot Bad Construction Compliance

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Home Depot (HD) issued a bare bones Q3 earnings release which provides no substantive management discussion and analysis. The earnings release throws out some headline guidance. The expectation of sales increasing by 2.2% has been raised to the status of Holy Grail. Then investors are referred to the conference call for further information. The conference call has the information advantage.

The press release is headlined as announcing Q3 results. But for this Dow 30 component the level of transparent financial reporting will have to wait. Where is the SEC on this one? How can we call this adequate and full disclosure?

Managements that  do not want to talk usually have something to hide. This one gets failing grades for financial communication.

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

Dynegy Proxy Shouting Match

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Dynegy (DYN) is facing a crucial vote on Nov 17, 2010 just a few days from now.They can accept what Blackstone Group (BX) has on the table or refuse. The refusal seems to be certain death. No other competing offers are on the table. No one was interested during the 40 day go shop period after the Blackstone offer was made public.

What is thoroughly confusing is the shouting match being conducted by the three major proxy voting recommendation services. Institutional Shareholder Services (ISS) recommends taking the deal. They point out no other offers and death spiral options if Blackstone walks away.

Glass Lewis & Company and Proxy Governance argue in favour refusing the deal. They claim the analysis in favour of Blackstone is flawed. In this case it would seem that the proxy research recommendation firms have not added value to the process. The arguments pro and con have not been much altered. The investor seems to be on his own.  Where are the lawsuits against the board for poor governance that lead to this discouraging state of affairs.

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

General Motors Feeding Frenzy

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The feeding frenzy continues. I am reminded of  Jason Zweig in his commentary on the fourth edition of Benjamin Graham’s The Intelligent Investor wrote about IPO’s at the end of chapter six. Here is what he called IPO’s:

It’s Probably Overpriced

Imaginary Profits Only

Insider’s Private Opportunity and last but not least

Idiotic, Preposterous and Outrageous

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

Is General Motors Juiced?

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The drum of IPO beats loudly. GM is coming. GM is coming. But which investors will get in on the deal? The brokers reward their best clients with the best deals. Some brokerages have no allocation. Restricted supply and frenzied demand will drive the price up.

The tax payer will lose if the deal is underpriced. The small investor who is a tax payer will miss the profit potential. If the frenzy burns out and the market becomes dis-enamoured how will the government sell the remainder of its vast holdings.

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

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Agoracom Guilty as Charged

Agoracom which had specialized in investor relations for small cap companies (we use the term investor relations very loosely) has been fined by the Ontario Securities Commission. According to the Globe and Mail Agoracom has been posting fake messages to pump up the stock prices of its clients.

Some may call the place a den of thieves as the CFO recently wrote a cheque to himself for $150,000 and practically beggared his former employer. He wasn’t too cool about it. He just took the money and ran off.  Must have been arguing about how to cut up the loot or something.

Small caps are risky. The boiler room tactics are a caveat emptor moment. Unless you are a moth drawn to the flame.

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

General Motors Crucifies UBS

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General Motors (GM) worst nightmare woke up the investing public. A high yield analyst working for UBS sent an email note to about 150 institutional clients. The SEC requested a copy of the note. The SEC also requires that no material disclosure occurs during an IPO other than prospectus materials and the official road show which GM executives are conducting. UBS was to be part of the underwriting syndicate and stood to make tens of millions of dollars. The analyst just blew a lot of bonuses and probably needs to be in protective custody.

General Motors quietly dropped UBS from the underwriting syndicate.

So what did this guy say? The analyst was not involved in the underwriting and is described as a high yield type. Was the analyst making a positive or negative comment?

Now that there is controversy why not publish the comments and make the playing field level. What if the analyst concluded the emperor wears no clothes? Has UBS avoided investor lawsuits because someone spoke the truth? UBS is declining to comment publicly.

Will UBS disclose the names  of the 150 clients who received the note? Will the buying activity of the clients be monitored to see if they changed their minds? Presumably the 150 clients have fiduciary responsibilities to make the best choices and decisions for their clients. Did the analyst do his job and protect his clients?

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