More Cheating = More Regulation

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I kind of like seeing the CEO of Wells Fargo on the hot seat in front of the house and senate for the fraudulent opening of customer accounts.  I always felt Wells Fargo’s conduct in general and their attitudeSkull toward their customers was criminal.  I just didn’t know how accurate my sentiments were.  Don’t get me wrong.  The rank and file are nice enough and hard working.  But they’re hamstrung by policies from on high that prevent them from acceding to customers needs.  And the imprint of senior management is imbedded in information systems that spit out a dizzying array of fees, penalties and abusive policies. read more

Failing Fast

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My friend, entrepreneur Marc Kramer has started about 20 businesses.  Some have succeeded, others have not.  Among his start-ups,  I asked himScreen Shot 2015-12-21 at 9.00.45 AM if he got signals early on the he had a clunker on his hands, and if so, what the signs were.

Generally, he said, he knew within about 120 days whether or not the concept is going to fly.  Here are some of the sign posts he saw along the way that informed his thinking.

Little word of mouth.  Kramer says word of mouth is the ultimate acid test.  “If consumers are using your product, and are not excited enough and satisfied enough to tell friends, family and colleagues about it, your product or service is unlikely to succeed.” read more

Investor Relations:  The Long Conversation

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If a stock shows a significant positive change in revenues or earnings with an attendant rise in the price, do you believe portfolio managers will be moved to buy it?

Conversely, if there were a significant negative change in earnings or revenues, would they short or sell it?clock-1425684-1279x1705

Chances are the portfolio manager would not buy or sell.  They would observe, they would take in the new data points, but that might be it.

Remember, a managed fund portfolio might have 50 to 100 positions.  Some have even fewer.  The point is, adding and subtracting positions is the most carefully considered activity a portfolio manager undertakes.  It is, in fact, exactly what they are paid for.  As a result it’s unlikely they will make a change based on a singular data point. read more

What Might Happen in 2016

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Twitter will be acquired.  Wall Street loves a good story, but it hates losses.  With half a billion in losses in 2014, and the company on track to lose more this year than last, somebody is going to pull the plug.   Parenthetical prediction:  Twitter CEO Jack Dorsey will not survive the year and focus on Square, also losing money.

FANG stocks will accelerateFacebook, Amazon, Netflix, Google will continue to eat other industries with the possible exception of Netflix, where competition is coming out of the woodwork. read more

The Spouting Whale Gets Harpooned

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With his high profile arrest and perp walk this morning, Martin Shkreli has a massive public relations problem on his hands.  As the photo demonstrates, the full force of the law is lined up against him.Screen Shot 2015-12-18 at 10.32.34 PM

Mr. Shkreli is the hedge fund manager turned pharmaceutical entrepreneur who provoked outrage when his Turing Pharmaceuticals increased the price of cancer and AIDS drug Daraprim by 5000%

I would offer his current problem with the media has its roots in a poor public relations strategy right out of the gate.   Sometimes blunting exposure is more important than gaining exposure.  Better to lay low and gauge sentiment than arrive on the scene with guns blazing.  His 5000% price increase might have ultimately faded from view if he stayed out of the spotlight.  And what he learned from the reaction of a smaller more manageable audience might have given him clues how to manage a larger national audience. read more

Pfizer: Representation Without Taxation

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413 x 239.pages copyInversion sure is the right word for the Allergan/Pfizer deal.  Because what got the colonists lathered up enough to fight a war against the one global super power at the time was taxation without representation.

Somehow that idea got turned on its head, and now one of the largest drug companies in America wants the representation the United States has to offer without the commensurate taxation (all this, mind you, from a voter registered as Republican).

From a shareholder perspective, it’s easy to connect the dots.  Lower taxes means higher earnings, and higher earnings means a higher stock price, and presto, shareholder value has been increased.  What else would anyone expect the senior leadership and board to do? read more

Your Investor Relations Media Plan Made Easy

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If you are a public company and trying to decide what media you should be focusing on, then the answer is actually very simple: Dow Jones, Reuters and Bloomberg.

That’s it.

Other earned media exposure, wherever, is not useless in support of an investor relations program, but it represents a very inefficient way to make progress.

This simple strategy, on the other hand, owes its existence to the denominator problem, which is this: the amount of time investors have to consume messages is fixed while the amount of information, and now content, competing for their attention i.e. the denominator — is growing exponentially. read more