gjg49's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/273654/comments http://seekingalpha.com/news/market_currents/post/38015?source=feed#comment-799698 799698 ..."will not be allowed to default"??
does someone give them permission??
who, exactly, will stop them from defaulting?
defaulting is kind of like dying. no one can stop you from dying, but someone can potentially rescue you if there are procedures to apply to whatever ails you. no one can prevent greece (or the UK) from defaulting, but perhaps someone holds some remedies to help them avert default.
soros may know something about the imf or the ecb, but there is absolutely no real information here.]]> Thu, 10 Dec 2009 09:54:01 -0500 ..."will not be allowed to default"??
does someone give them permission??
who, exactly, will stop them from defaulting?
defaulting is kind of like dying. no one can stop you from dying, but someone can potentially rescue you if there are procedures to apply to whatever ails you. no one can prevent greece (or the UK) from defaulting, but perhaps someone holds some remedies to help them avert default.
soros may know something about the imf or the ecb, but there is absolutely no real information here.]]> http://seekingalpha.com/article/170927-riding-the-rails-why-bni-was-berkshire-s-best-bet-and-vintage-buffett?source=feed#comment-752149 752149
buffett talks about waiting for people, probably most often private family-owned enterprises, to want to sell their businesses and then scooping them up for what will be the most advantageous circumstances for the sellers, the employees, and the customers of the firm. from the seller's perspective, this deal does not contain any components of what buffett generally seems to practice--well, maybe it will be good for the employees. as examples, recent deals for buffett resolved family issues for privately-owned mars and for the pritzker family with marmon/hyatt--how does BNI reflect any intractable issues that the sellers might face?

so, two questions:
first, if BNI holds such a promise of great long term value, why would BNI's management (not just the ceo, but the promising up-and-comers etc) want to effectively reduce their bets on what they can control, BNI itself, and instead stake their longer term futures on the vast and diffuse BRK empire??

second, why has buffett chosen this time to seemingly break his own very-well-tested modus operandi on acquisitions (yes, he bought all of flight safety and dairy queen, but these were relatively small and had somewhat special circumstances from the sellers perspective) and buy 100% of a large company??

buehler, buehler?? ...anyone, anyone ???

disclosure: i own some brk/b and bought bni last week as a risk arbitrage play.]]> Mon, 09 Nov 2009 08:38:20 -0500
buffett talks about waiting for people, probably most often private family-owned enterprises, to want to sell their businesses and then scooping them up for what will be the most advantageous circumstances for the sellers, the employees, and the customers of the firm. from the seller's perspective, this deal does not contain any components of what buffett generally seems to practice--well, maybe it will be good for the employees. as examples, recent deals for buffett resolved family issues for privately-owned mars and for the pritzker family with marmon/hyatt--how does BNI reflect any intractable issues that the sellers might face?

so, two questions:
first, if BNI holds such a promise of great long term value, why would BNI's management (not just the ceo, but the promising up-and-comers etc) want to effectively reduce their bets on what they can control, BNI itself, and instead stake their longer term futures on the vast and diffuse BRK empire??

second, why has buffett chosen this time to seemingly break his own very-well-tested modus operandi on acquisitions (yes, he bought all of flight safety and dairy queen, but these were relatively small and had somewhat special circumstances from the sellers perspective) and buy 100% of a large company??

buehler, buehler?? ...anyone, anyone ???

disclosure: i own some brk/b and bought bni last week as a risk arbitrage play.]]> http://seekingalpha.com/article/170550-nine-companies-increasing-dividends?source=feed#comment-743048 743048 vanguard has a relatively low fee (0.35% per year) fund called the dividend appreciation index fund (vdaix) that mimics the index of the s&p dividend achievers. mstar gives it 4 stars, but i didn't check out who mstar benchmarks the fund against. one caveat, firms like wells fargo and pfizer cut their dividends during 2009, but s&p only creates the list once per year; hence, vanguard includes them in the fund just as s&p currently includes them in the list of dividend achievers--you and i know with virtual certainty that s&p will exclude them in the 2010 list but vanguard will not eliminate the position until the new list comes out (ironically, wells fargo is the largest holding according to vanguard's web site.)

vanguard also has an actively managed fund, the dividend growth fund (vdigx) that gets 5 stars from mstar, has slightly lower fees (0.32% per year), and also offers a higher current yield than vdaix.

by the way, if you prefer etfs, vanguard also offers vig, an etf that should tracks the same index used by vgaix but only costs 0.24% per year. mstar gives vig 4 stars.


On Nov 03 08:52 AM User 458794 wrote:

> To: Dividend Growth Investor (not sure how to reach you otherwise),
> or other contributor:
> Question: Is there a highly rated (Morningstar 5-star) Mutual Fund
> you would suggest as a core holding for my Roth IRA which contains
> the top Dividend Growth U.S. companies that you mention often, that
> is also no load and low fees? This would hopefully anchor a portfolio
> of individual dividend stocks. Looking at a 10 to 15 year time frame
> now. I am having trouble looking for this data myself. Thanks.]]> Tue, 03 Nov 2009 16:42:28 -0500 vanguard has a relatively low fee (0.35% per year) fund called the dividend appreciation index fund (vdaix) that mimics the index of the s&p dividend achievers. mstar gives it 4 stars, but i didn't check out who mstar benchmarks the fund against. one caveat, firms like wells fargo and pfizer cut their dividends during 2009, but s&p only creates the list once per year; hence, vanguard includes them in the fund just as s&p currently includes them in the list of dividend achievers--you and i know with virtual certainty that s&p will exclude them in the 2010 list but vanguard will not eliminate the position until the new list comes out (ironically, wells fargo is the largest holding according to vanguard's web site.)

vanguard also has an actively managed fund, the dividend growth fund (vdigx) that gets 5 stars from mstar, has slightly lower fees (0.32% per year), and also offers a higher current yield than vdaix.

by the way, if you prefer etfs, vanguard also offers vig, an etf that should tracks the same index used by vgaix but only costs 0.24% per year. mstar gives vig 4 stars.


On Nov 03 08:52 AM User 458794 wrote:

> To: Dividend Growth Investor (not sure how to reach you otherwise),
> or other contributor:
> Question: Is there a highly rated (Morningstar 5-star) Mutual Fund
> you would suggest as a core holding for my Roth IRA which contains
> the top Dividend Growth U.S. companies that you mention often, that
> is also no load and low fees? This would hopefully anchor a portfolio
> of individual dividend stocks. Looking at a 10 to 15 year time frame
> now. I am having trouble looking for this data myself. Thanks.]]> http://seekingalpha.com/article/164247-an-opportunity-in-chevron?source=feed#comment-699418 699418
by my calculation (and i err as frequently as anyone else, so i am open to correction) over the past 12 months, cvx generated $20 billion in operating cash flow and spent $21.1 billion on capital spending. if that is correct, then cvx did not generate a sufficient level of cash flow to pay the dividend over the past 12 months. if correct, cvx effectively "borrowed" (either consuming cash off the balance sheet or increasing external borrowing) by approximately $6.3 billion to pay the $5.2 billion in dividends over the past 12 months.

as of june 30, 2009, cvx also runs a net debt position of $4.7 billion (that is, total debt exceeds cash on the balance sheet--this contrasts with a $600 million net cash position at dec 31, 2008 and a $2 billion net cash position at june 30, 2008), albeit not very large relative to the size of the $161 billion asset base and $87 billion equity base. if the operating cash flow and capital spending remain on the same path, chevron will need to increase net debt to continue to pay the dividend at the same rate.

management may well be able to tweak the operating cash flow and/or capital spending to improve the free cash flow generation, but unless they do, i would be less comfortable about the sustainability of the dividend at the current rate. i would not expect a dividend cut imminently, but at the same time, things will need to improve to sustain the dividend at the current rate.]]> Thu, 01 Oct 2009 21:41:16 -0400
by my calculation (and i err as frequently as anyone else, so i am open to correction) over the past 12 months, cvx generated $20 billion in operating cash flow and spent $21.1 billion on capital spending. if that is correct, then cvx did not generate a sufficient level of cash flow to pay the dividend over the past 12 months. if correct, cvx effectively "borrowed" (either consuming cash off the balance sheet or increasing external borrowing) by approximately $6.3 billion to pay the $5.2 billion in dividends over the past 12 months.

as of june 30, 2009, cvx also runs a net debt position of $4.7 billion (that is, total debt exceeds cash on the balance sheet--this contrasts with a $600 million net cash position at dec 31, 2008 and a $2 billion net cash position at june 30, 2008), albeit not very large relative to the size of the $161 billion asset base and $87 billion equity base. if the operating cash flow and capital spending remain on the same path, chevron will need to increase net debt to continue to pay the dividend at the same rate.

management may well be able to tweak the operating cash flow and/or capital spending to improve the free cash flow generation, but unless they do, i would be less comfortable about the sustainability of the dividend at the current rate. i would not expect a dividend cut imminently, but at the same time, things will need to improve to sustain the dividend at the current rate.]]> http://seekingalpha.com/news/market_currents/post/32716?source=feed#comment-683635 683635
allow me to clarify my comment. the $800 billion should have been $80 billion per year cost for the proposed system. the study that prompted this whole thread suggested that only 40,000 lives would be saved annually by insuring people who are currently uninsured. if we save 40,000 lives per year at a cost of $80 billion, that equals $1.8 million per life saved. the article and the comment said nothing about illegal immigrants.

the question is: who believes that spending that much money to save that few lives is worth it??
a corollary question might be: how could we (the people of the united states) spend less money to save more lives??
i don't necessarily have answers to these questions, but if you are either for or against the proposed health care plan, you ought to have some framework for answering those two questions. one question addresses the potential return from the plan and the second question addresses alternative investments to gain the same benefit.]]> Sat, 19 Sep 2009 17:09:39 -0400
allow me to clarify my comment. the $800 billion should have been $80 billion per year cost for the proposed system. the study that prompted this whole thread suggested that only 40,000 lives would be saved annually by insuring people who are currently uninsured. if we save 40,000 lives per year at a cost of $80 billion, that equals $1.8 million per life saved. the article and the comment said nothing about illegal immigrants.

the question is: who believes that spending that much money to save that few lives is worth it??
a corollary question might be: how could we (the people of the united states) spend less money to save more lives??
i don't necessarily have answers to these questions, but if you are either for or against the proposed health care plan, you ought to have some framework for answering those two questions. one question addresses the potential return from the plan and the second question addresses alternative investments to gain the same benefit.]]> http://seekingalpha.com/article/162296-gold-the-moriarty-warning?source=feed#comment-682929 682929 page 66 of irs publication 550 indicates that the long term cap gains rate for collectibles (and this includes gold--gold, silver, and platinum are specifically noted) is 28%. that may be less than your tax rate on ordinary income, but the tax rate for long term gains should probably not be a consideration for whether you hold or sell gold.


On Sep 18 03:38 PM tb1975 wrote:

> If you are in gold for the right reasons, then the long term is all
> that matters. I wouldn't take profits here. I'd wait to there was
> a clear and legitimate reason for the 8 year bull run to be over
> in gold.
>
> Are we printing less money? Is the dollar set to rally long term?
> Are interest rates high? etc, etc. When the answer to those questions
> is yes, that's when you sell gold.
>
> If you are trying to time the market and jump in and out, good luck
> with that. I'll hold and pay long term gains tax rather than the
> harsh short term gains tax.]]> Fri, 18 Sep 2009 16:54:13 -0400 page 66 of irs publication 550 indicates that the long term cap gains rate for collectibles (and this includes gold--gold, silver, and platinum are specifically noted) is 28%. that may be less than your tax rate on ordinary income, but the tax rate for long term gains should probably not be a consideration for whether you hold or sell gold.


On Sep 18 03:38 PM tb1975 wrote:

> If you are in gold for the right reasons, then the long term is all
> that matters. I wouldn't take profits here. I'd wait to there was
> a clear and legitimate reason for the 8 year bull run to be over
> in gold.
>
> Are we printing less money? Is the dollar set to rally long term?
> Are interest rates high? etc, etc. When the answer to those questions
> is yes, that's when you sell gold.
>
> If you are trying to time the market and jump in and out, good luck
> with that. I'll hold and pay long term gains tax rather than the
> harsh short term gains tax.]]> http://seekingalpha.com/news/market_currents/post/32716?source=feed#comment-682380 682380
as for manipulating stats... if you "invest" (in this case the proposed plan would hopefully save lives) but don't consider the potential return, then you will soon burn through your investment. that is not manipulating stats. it is asking what kind of return you get for how much investment. the plan baucus proposed would cost over $800 billion over ten years and the articles that triggered this thread suggest that insuring the currently uninsured would save around 44000 lives per year. how would you propose measuring the return from the investment???

On Sep 18 09:28 AM battman wrote:

> Talk about manipulating stats. Do you work for the Fed?
>
> 800 billion would be to cover EVERY American, not just those lives
> it could save.]]> Fri, 18 Sep 2009 10:04:36 -0400
as for manipulating stats... if you "invest" (in this case the proposed plan would hopefully save lives) but don't consider the potential return, then you will soon burn through your investment. that is not manipulating stats. it is asking what kind of return you get for how much investment. the plan baucus proposed would cost over $800 billion over ten years and the articles that triggered this thread suggest that insuring the currently uninsured would save around 44000 lives per year. how would you propose measuring the return from the investment???

On Sep 18 09:28 AM battman wrote:

> Talk about manipulating stats. Do you work for the Fed?
>
> 800 billion would be to cover EVERY American, not just those lives
> it could save.]]> http://seekingalpha.com/news/market_currents/post/32716?source=feed#comment-682307 682307 Fri, 18 Sep 2009 09:14:31 -0400 http://seekingalpha.com/article/161050-13-consistent-dividend-raising-companies-currently-on-freeze?source=feed#comment-676510 676510
why do you include them on a list of firms that have not raised their dividend in a year when they actually have and when they very probably will again this year?

i estimate that itw paid out just under 30% of their available free cash flow in dividends over the latest 12 months. further, itw could pay off all their debt in less than two years excess free cash flow (cash flow from ops minus cap exp minus divdiends) if they maintained free cash flow at the rate of the past 12 months. unless they see something very bothersome in the economy, they probably will again raise the dividend in late september.]]> Mon, 14 Sep 2009 17:10:54 -0400
why do you include them on a list of firms that have not raised their dividend in a year when they actually have and when they very probably will again this year?

i estimate that itw paid out just under 30% of their available free cash flow in dividends over the latest 12 months. further, itw could pay off all their debt in less than two years excess free cash flow (cash flow from ops minus cap exp minus divdiends) if they maintained free cash flow at the rate of the past 12 months. unless they see something very bothersome in the economy, they probably will again raise the dividend in late september.]]> http://seekingalpha.com/article/158173-4-dividend-stocks-to-hedge-against-social-security-failure?source=feed#comment-647373 647373 Wed, 26 Aug 2009 11:26:07 -0400 http://seekingalpha.com/article/155920-why-dividend-etfs-can-help-you-through-hard-times?source=feed#comment-631189 631189 jayb is correct..you looked at the wrong etf.
additionally, the last dividend for spy was 0.518, but you also need to look at the frequency of dividend payments. spy pays a dividend 4 times per year, so the annual yield is approximately 2%, not 0.5%]]> Sat, 15 Aug 2009 16:53:35 -0400 jayb is correct..you looked at the wrong etf.
additionally, the last dividend for spy was 0.518, but you also need to look at the frequency of dividend payments. spy pays a dividend 4 times per year, so the annual yield is approximately 2%, not 0.5%]]> http://seekingalpha.com/article/155561-apple-s-current-valuation-is-still-reasonable?source=feed#comment-630992 630992
if apple ever ports the iphone to verizon i will jump on the platform with all the apps (iphone). and as tom points out, the developer world will start to gravitate toward apple (not abandoning windows, but taking advantage of apple consumer appeal). currently, apple appeals to the consumer pc market, but look for apple to start making headway in the small biz market with developers' efforts.

my biggest concern with apple is the ipod, but even there, they have the "razor blade" of itunes etc to go with the ipod "razors". itunes seems to be a durable franchise.]]> Sat, 15 Aug 2009 12:38:29 -0400
if apple ever ports the iphone to verizon i will jump on the platform with all the apps (iphone). and as tom points out, the developer world will start to gravitate toward apple (not abandoning windows, but taking advantage of apple consumer appeal). currently, apple appeals to the consumer pc market, but look for apple to start making headway in the small biz market with developers' efforts.

my biggest concern with apple is the ipod, but even there, they have the "razor blade" of itunes etc to go with the ipod "razors". itunes seems to be a durable franchise.]]> http://seekingalpha.com/article/140827-dividend-contribution-by-sector-for-the-s-p-500-index?source=feed#comment-528499 528499 Tue, 02 Jun 2009 14:37:35 -0400 http://seekingalpha.com/article/139588-u-s-treasury-owned-gold-what-can-it-buy?source=feed#comment-522064 522064
my wife says that i worry about everything--she is probably correct. sorry, couldn't resist a bit of levity.

anyway, deflation should theoretically increase or improve the future buying power of bonds, certificates of deposit, money market funds, etc. someone paying me back in future dollars would actually be returning me more buying power in the future than i give them today (that is, with enough deflation, one dollar will buy me a pack and a half of m&ms instead of one pack today--so they would pay me back in more goods and improve the value of my savings.) from what i can tell, the buying power of TIPs probably will hold constant or improve slightly as well. as long as one gets repaid, deflation clearly benefits most holders of debt. however, serious deflation probably also increases the risk of default by virtually all debt issuers. that clearly raises my concern about deflation in regard to government and corporate debt.

under deflation, however, the future buying power of an ounce of gold and/or a certain number of shares of an equity and/or a certain property may rise or fall from the current level under deflation. the issue would be whether the prices of gold, the common stock, or the property deflated more or less than the general price level. the price of gold should be a function of the demand and supply of it; concern over inflation may be unduly raising demand currently and hence, the price could drop much more sharply than the general price index if inflation fears subside. don't take this a forecast--but take it as an acknowledgment that you might very well be correct. i think that the same probably would be true of equities and real estate.]]> Thu, 28 May 2009 18:27:05 -0400
my wife says that i worry about everything--she is probably correct. sorry, couldn't resist a bit of levity.

anyway, deflation should theoretically increase or improve the future buying power of bonds, certificates of deposit, money market funds, etc. someone paying me back in future dollars would actually be returning me more buying power in the future than i give them today (that is, with enough deflation, one dollar will buy me a pack and a half of m&ms instead of one pack today--so they would pay me back in more goods and improve the value of my savings.) from what i can tell, the buying power of TIPs probably will hold constant or improve slightly as well. as long as one gets repaid, deflation clearly benefits most holders of debt. however, serious deflation probably also increases the risk of default by virtually all debt issuers. that clearly raises my concern about deflation in regard to government and corporate debt.

under deflation, however, the future buying power of an ounce of gold and/or a certain number of shares of an equity and/or a certain property may rise or fall from the current level under deflation. the issue would be whether the prices of gold, the common stock, or the property deflated more or less than the general price level. the price of gold should be a function of the demand and supply of it; concern over inflation may be unduly raising demand currently and hence, the price could drop much more sharply than the general price index if inflation fears subside. don't take this a forecast--but take it as an acknowledgment that you might very well be correct. i think that the same probably would be true of equities and real estate.]]> http://seekingalpha.com/article/140214-spiraling-federal-debt-it-s-likely-to-get-worse?source=feed#comment-521997 521997 Thu, 28 May 2009 17:28:02 -0400 http://seekingalpha.com/article/139588-u-s-treasury-owned-gold-what-can-it-buy?source=feed#comment-520409 520409 you are both correct that fiat money and credit are far more efficient than gold (or barter, silver, etc) to provide the transaction value of money.
however, money serves two purposes 1) to make transactions more efficient and 2) as a store of value (that is, to efficiently provide for saving or postponing current consumption to provide for current consumption. as a store of value, the recent explosion in the money supply creates considerable doubt about whether the currency will maintain anything close to the same purchasing power. if aggregate money supply doubles and all else stays the same (not always the case, but at least a sensible starting point for discussion), the value that money "stores" will be radically reduced. the so-called gold bugs assert (and i can't see any clear reason to doubt them on this) that gold will maintain some semblance of value. recently someone stated that an ounce of gold would approximately buy a man's suit in 1900 and still approximately buy's a man's suit in 2009. as a retiree, personally i am interested in maintaining or hopefully increasing the future buying power of my current wealth. how comfy should i feel that i can retain purchasing power in us government "fiat" money when bernanke seemingly is printing it 24 by 7 ??]]> Wed, 27 May 2009 19:42:56 -0400 you are both correct that fiat money and credit are far more efficient than gold (or barter, silver, etc) to provide the transaction value of money.
however, money serves two purposes 1) to make transactions more efficient and 2) as a store of value (that is, to efficiently provide for saving or postponing current consumption to provide for current consumption. as a store of value, the recent explosion in the money supply creates considerable doubt about whether the currency will maintain anything close to the same purchasing power. if aggregate money supply doubles and all else stays the same (not always the case, but at least a sensible starting point for discussion), the value that money "stores" will be radically reduced. the so-called gold bugs assert (and i can't see any clear reason to doubt them on this) that gold will maintain some semblance of value. recently someone stated that an ounce of gold would approximately buy a man's suit in 1900 and still approximately buy's a man's suit in 2009. as a retiree, personally i am interested in maintaining or hopefully increasing the future buying power of my current wealth. how comfy should i feel that i can retain purchasing power in us government "fiat" money when bernanke seemingly is printing it 24 by 7 ??]]> http://seekingalpha.com/article/131085-obama-s-stock-holdings-include-northern-trust-jp-morgan?source=feed#comment-465469 465469
most tellingly, if you look carefully at line 9b on page one of the 1040, obama shows NO qualified dividends. if they received dividends from either jp morgan or northern trust, they should have showed them as qualified so as to only incur a 15% tax rate rather than the mid 30% tax on that $26558. so the "dividends" shown on page 2 of schedule a/b are almost certainly money market fund "dividends" (they are reported on 1099-div, not 1099-int by fund companies such as vanguard or by brokers such as northern trust securities, the payee of the so-called "dividend" to the obamas.)

tyler, you may know something about investments, but you need to become much more familiar with taxes (then again, so do geithner, daschell, and a few others) before you overly incite people over this stuff.
]]> Thu, 16 Apr 2009 13:51:27 -0400
most tellingly, if you look carefully at line 9b on page one of the 1040, obama shows NO qualified dividends. if they received dividends from either jp morgan or northern trust, they should have showed them as qualified so as to only incur a 15% tax rate rather than the mid 30% tax on that $26558. so the "dividends" shown on page 2 of schedule a/b are almost certainly money market fund "dividends" (they are reported on 1099-div, not 1099-int by fund companies such as vanguard or by brokers such as northern trust securities, the payee of the so-called "dividend" to the obamas.)

tyler, you may know something about investments, but you need to become much more familiar with taxes (then again, so do geithner, daschell, and a few others) before you overly incite people over this stuff.
]]> http://seekingalpha.com/article/130669-pimco-s-kiesel-three-reasons-to-buy-high-grade-corporate-bonds-now?source=feed#comment-462712 462712 Tue, 14 Apr 2009 10:05:32 -0400 http://seekingalpha.com/article/118084-bankruptcy-is-good-for-satyam?source=feed#comment-374643 374643 ]]> Tue, 03 Feb 2009 13:44:55 -0500 ]]> http://seekingalpha.com/article/113997-there-are-many-more-satyams-out-there?source=feed#comment-370587 370587 first, leverage has absolutely NOTHING to do with the Satyam fraud. Balance sheet leverage derives only from debt (or perhaps off balance sheet debt) or contingent liabilities (contract leverage). Satyam had neither. (BTW AIG's leverage was contract leverage--large batches of CDSs that represented very low $ liabilities until suddenly one day they all kicked in and represented very high $ liabilities--kind of like an insurer who has no claims to pay until the day after a hurricane when they suddenly incur massive claims.) Again, from everything I have heard, Satyam had neither debt nor any contingent liabilities that suddenly exploded on them.
Second, Indian authorities arrested two of PWC's auditors on the Satyam account a couple of days ago.
Rakesh, with all due respect, you should consider taking an accounting course to insure that you better understand financial statements. The cash issue that I raised has nothing to do with leverage and it has nothing to do with some of the cash flow and operating margin items you suggest. Cash itself and the entire balance sheet represent snapshots of the financial condition at a given moment in time--say 11:59 PM on December 31. At that moment, Satyam either had $x of cash in such-and-such a bank or it did not. Similarly, either they owed someone or they did not. Valuing inventories and receivables and most other items can be open to negotiations (how much is last year's undeployed personal computer actually worth in inventory.) But cash should not be open to any interpretation. The value of a contingent liability may be--such as the AIG CDSs. Someone either never checked to see whether cash assets were real or someone actually helped management perpetrate this--the arrests seem to suggest the latter. "Cash flows" and operating margins both represent "flows" or movement of funds over periods of time--quarters or years, not balance sheet snapshots.
]]> Thu, 29 Jan 2009 22:08:40 -0500 first, leverage has absolutely NOTHING to do with the Satyam fraud. Balance sheet leverage derives only from debt (or perhaps off balance sheet debt) or contingent liabilities (contract leverage). Satyam had neither. (BTW AIG's leverage was contract leverage--large batches of CDSs that represented very low $ liabilities until suddenly one day they all kicked in and represented very high $ liabilities--kind of like an insurer who has no claims to pay until the day after a hurricane when they suddenly incur massive claims.) Again, from everything I have heard, Satyam had neither debt nor any contingent liabilities that suddenly exploded on them.
Second, Indian authorities arrested two of PWC's auditors on the Satyam account a couple of days ago.
Rakesh, with all due respect, you should consider taking an accounting course to insure that you better understand financial statements. The cash issue that I raised has nothing to do with leverage and it has nothing to do with some of the cash flow and operating margin items you suggest. Cash itself and the entire balance sheet represent snapshots of the financial condition at a given moment in time--say 11:59 PM on December 31. At that moment, Satyam either had $x of cash in such-and-such a bank or it did not. Similarly, either they owed someone or they did not. Valuing inventories and receivables and most other items can be open to negotiations (how much is last year's undeployed personal computer actually worth in inventory.) But cash should not be open to any interpretation. The value of a contingent liability may be--such as the AIG CDSs. Someone either never checked to see whether cash assets were real or someone actually helped management perpetrate this--the arrests seem to suggest the latter. "Cash flows" and operating margins both represent "flows" or movement of funds over periods of time--quarters or years, not balance sheet snapshots.
]]> http://seekingalpha.com/article/113997-there-are-many-more-satyams-out-there?source=feed#comment-351142 351142 As a retired investment analyst with over 25 years of experience and as a retired manager of a tech fund, I think you understated the fraud involved at SAY.
I have always used cash flow as the ultimate measure--it is far far more difficult to cheat on cash flow than on the income statement (virtually everybody embellishes the P+L). But SAY was EXTREME. How could they possibly have made the two largest single items on their balance sheet (from the 20-F filed 8/8/2008 at sec.gov--cash and investments in bank deposits) look so much larger than they actually were. Your assertion that they finagled with accounts payable (only $32 million compared to $290 million in cash) seems unlikely--this suggests that they had cash because they didn't pay vendors $300 million but they somehow made the $300 million of payables disappear?? Maybe they withheld pay to their employees (at least accrued expenses shows as $238 million) but this still seems unlikely. And how could they possibly show investments in bank deposits at $826 million?? This dwarfs every other number on the balance sheet.
I don't mean this to be critical of you (or your article), but I do mean this to seriously question whether you are anywhere near explaining what happened at SAY. (PS I do not and did not have any economic interest in SAY, but having looked at the company, I have an intense intellectual interest in how they perpetrated this.)
I suspect that some parties at PWC probably were involved in a major way. I would be very interested in any info you have on that topic and how the big auditors interface with clients in developing countries.
Thanks
]]> Fri, 09 Jan 2009 15:35:34 -0500 As a retired investment analyst with over 25 years of experience and as a retired manager of a tech fund, I think you understated the fraud involved at SAY.
I have always used cash flow as the ultimate measure--it is far far more difficult to cheat on cash flow than on the income statement (virtually everybody embellishes the P+L). But SAY was EXTREME. How could they possibly have made the two largest single items on their balance sheet (from the 20-F filed 8/8/2008 at sec.gov--cash and investments in bank deposits) look so much larger than they actually were. Your assertion that they finagled with accounts payable (only $32 million compared to $290 million in cash) seems unlikely--this suggests that they had cash because they didn't pay vendors $300 million but they somehow made the $300 million of payables disappear?? Maybe they withheld pay to their employees (at least accrued expenses shows as $238 million) but this still seems unlikely. And how could they possibly show investments in bank deposits at $826 million?? This dwarfs every other number on the balance sheet.
I don't mean this to be critical of you (or your article), but I do mean this to seriously question whether you are anywhere near explaining what happened at SAY. (PS I do not and did not have any economic interest in SAY, but having looked at the company, I have an intense intellectual interest in how they perpetrated this.)
I suspect that some parties at PWC probably were involved in a major way. I would be very interested in any info you have on that topic and how the big auditors interface with clients in developing countries.
Thanks
]]> http://seekingalpha.com/article/113653-satyam-scandal-india-s-claim-to-ponzi-fame?source=feed#comment-350114 350114 ]]> Thu, 08 Jan 2009 16:33:02 -0500 ]]> http://seekingalpha.com/article/105299-great-expectations-for-obama-but-not-the-markets?source=feed#comment-303244 303244
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]]> http://seekingalpha.com/article/100100-baltic-dry-shipping-index-if-it-really-is-a-proxy-for-the-economy-we-re-in-trouble?source=feed#comment-283804 283804 Thu, 16 Oct 2008 12:50:59 -0400