There are a handful of red flags that should make you Run-Do-Not-Walk in the the opposite direction from any publicly traded company.
An obvious one is when management laments short sellers. You will note that while plenty of disaster stock managements have done this, you really don’t here it from the likes of well managed companies — because smart people understand the role shorts play in the market. And, they run the company in a way that keeps them out of the short’s crosshairs.
The other flashing red light that should have you lunging for the phone to call your broker is when management does not allow analysts or reporters to their public shareholder meeting.
That’s what IDT did this week, and it gives the company the appearance of having something to hide.
The IDT Corporation, a telecommunications and entertainment company that is under pressure for its languishing share price, barred a New York Times reporter from its shareholder meeting yesterday.
In the last year, the company has drawn attention on several fronts, including its foray into making movies and some disputes surrounding its long-distance telephone business.
Nell Minow, editor of The Corporate Library, a governance watchdog, said barring journalists from annual meetings was uncommon but not unprecedented. There is nothing requiring public companies to open their shareholder meetings to the public.
"Sunshine is the best disinfectant, and companies that have nothing to hide welcome the press," Ms. Minow said.
Not only did they not allow the press into a public meeting, the idiots got caught lying about it:
"A woman identifying herself as working for media relations at IDT, which is based in Newark, said it was her understanding that IDT has never let reporters attend its annual meetings.
But newspaper archives indicate that reporters from New Jersey newspapers attended IDT’s annual meetings in 1997 and 2000."
Hey, if you don’t want the public (or their representatives) coming to your meetings, THEN DONT GO PUBLIC. The reasoning involved is simple enough that even a PR flack should be able to figure that out.
As previously mentioned, there are 9,000 public companies. Limit your choice to one of the remaining 8,999 firms, trying to choose one that has a credible, intelligent management team.
Here’s some good investment advise you won’t find in any book: steer clear of assclowns.
That includes firms that may have something to hide — like IDT . . .
Once again, I have to ask: Where is the NYSE in all this? Is it there policy that its OK for companies to disallow reporters or analysts from public meetings of their listed companies?
Shout out to John Thain: Any chance of promulgating a shareholder friendly listing requirement that prevents this sorta nonsense from happening? While it obviously reflects poorly on the listed company, it also makes the NYSE look pretty pathetic by association . . .
Phone Company Bars Reporter From Its Shareholder Meeting
NYT, December 16, 2005
Category: Corporate Management
The Federal Reserve, as expected raised interest rates for the
13th consecutive time Tuesday, lifting the federal-funds rate by a quarter
percentage point to 4.25%. The central bank suggested it would raise rates
again, but also hinted that it is less certain on its future rate actions than
it has been in over a year. In the accompanying statement, the Fed said growth
remained "solid", inflation excluding food and energy prices had "stayed
relatively low," and inflation expectations were contained. But it also warned
that the possibility of further erosion of spare productive capacity and high
energy prices "have the potential to add to inflation pressures."
economists and other analysts make of the changes? Here’s a sample of their
* * *
The Fed has finally taken the step that we have been
pointing to for a while, in separating the two concepts of reaching neutrality
and finishing the rate cycle. They kept "measured," as we thought they might,
but now it refers to "some further measured policy firming" as opposed to
removing accommodation at a measured rate. So, rather than being on automatic
pilot in raising rates toward neutral, the FOMC now sees itself in the second
stage of the rate hike cycle — further moves will be perceived by Fed officials
as taking policy toward a restrictive stance.
– Stephen Stanley, RBS
* * *
The message from the FOMC appears to be that barring a
major change in the tone of economic data, another 25bp tightening move will be
implemented at Chairman Greenspan’s last meeting on January 31. At that time, it
is quite possible that the "measured phrase" will be jettisoned, leaving
incoming Chairman Ben Bernanke with a clean slate for the next meeting on March
28. Our own view remains that the evidence concerning economic growth should be
sufficiently strong in coming months to spur another three 25bp tightening
moves, lifting the Fed funds target to 5.00% in the second quarter of the year.
We think that growth will then be moderating sufficiently for the FOMC to cease
tightening, even if core inflation drifts up mildly from its current
– Joshua Shapiro, Maria Fiorini Ramirez Inc.
* * *
The Fed announced: "Core inflation has stayed relatively
low in recent months and longer-term inflation expectations remain contained."
Quite frankly, we do not believe them. We know that beyond the rises in food and
energy prices, nearly everything — from healthcare to building materials to
education costs to insurance to commodities — costs more. And gold, the world’s
best inflation indicator, is well over $500 per ounce. Where ever we look, we
see evidence that prices have limited stability and an upward bias.
Barry Ritholtz, Maxim Group
* * *