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  • Barington Capital escalates activist stance towards Darden with 84-page report [View news story]
    In theory, the split would create separate management teams that have the appropriate skill set to run each business. I buy the argument that decentralization would be beneficial in refocusing the many disparate brands under the present structure (despite any economies of scale that may be lost). I also believe that separate management teams would allow greater autonomy in executing the proper marketing and promotional strategies that the different brands would require.

    From an analyst's perspective, separate reporting structures would give the investors more clarity in their valuations. The same argument has been made about GE for years. In that case, how many analysts out there can be experts in financial services, aviation, plastics, healthcare, and real estate at the same time and then be expected to keep up with each industry? And then parse out each business with limited information while being forced to make assumptions on overhead, cost of capital, synergies blah blah? What ends up happening is the company gets tagged with a multiple and everyone calls it a day.

    Darden is not so complex but you see my point...split reporting allows for great granularity and gives the experts what they need to form a better opinion. Although that doesn't necessarily mean they'll like what they see...
    Dec 18, 2013. 09:31 AM | Likes Like |Link to Comment
  • Why Value Investors Should Take A Look At For-Profit Education Companies [View article]
    Good analysis on the risks/rewards. However, I'd note that an additional risk to the industry is the fact that individual states are also developing debt-income and default rate hurdles in order to police the industry.

    What are your thoughts on the "90/10" rule for proprietary colleges ( a for-profit school must derive 10% of revenue from non-federal sources)? Aside from external pressures associated with gainful employment, industry leaders like Kaplan and Apollo are actively taking measures to reduce enrollment in order to slow the imminent violation of this rule. They are also considering tuition increases for the same reasons. Continued violation of the 90/10 rule would mean additional public funding restrictions and, ultimately, Title IV ineligibility. I would consider this a major risk to the industry barring any new information about a possible repeal/revision of this rule.

    I'd note that an additional "like" for this industry as that insofar as the department of education in unwilling to let larger schools fail, most of the public for-profits may be safe. Too big to fail comes to mind. Based on the comically innocuous final ruling on "gainful employment", its not far-fetched to assume that prop schools will be allowed to continue as-is for the near future.
    Aug 30, 2011. 05:27 PM | Likes Like |Link to Comment
  • China: It Doesn't Take a Genius to Figure Out How This Will End [View article]
    sorry... didn't mean to re-post over and over
    Jan 13, 2010. 02:18 PM | Likes Like |Link to Comment
  • China: It Doesn't Take a Genius to Figure Out How This Will End [View article]
    To Cyclingscholar - I don't know if you caught the memo but we live in something called a "globalized economy". China is and has been our most important economic partner not only because they are a huge exporter of good but also because they are a huge consumer of goods as well. (Consider the billions of dollars generated by western brands that now sell their products in China). After you explain to me how we stand to benefit (beyond satisfying an antiquated form of patriotism) from any of the 4 points you mentioned, you can start to tell me how we go about with our threats without everyone laughing in our face. Last time I checked, China had their hooks in us for over 1 Trillion in gov't and agency debt.

    The author makes very good points relating the cycle of over-consumption and debt to China. I don't see a total collapse but I do see a correction coming soon. I truly believe that there are some built in levers that the government can pull... as many of the limitations of doing business today in China are regulatory-related.
    Jan 13, 2010. 02:14 PM | 7 Likes Like |Link to Comment
  • Why the Fed's TALF Is Bad for America [View article]
    Hey COOK

    Why are you talking about GECC when this article is on TALF?

    Mar 5, 2009. 01:20 PM | 2 Likes Like |Link to Comment
  • How Much Downside Could Still Exist? [View article]
    Impressive alliteration though....

    On Mar 03 06:47 AM CautiousInvestor wrote:

    > "From the prism of facts pertaining to previous recessions, the risks,
    > including systemic risks, within the broad American financial framework
    > are now fully priced."
    > If I understand you correctly then I respectfully disagree.
    > Yesterday's market action was driven, in part, by AIG who incurred
    > massive quarterly losses as a result of restructuring charges and
    > continuing losses on CDS's and securites backed by commercial real
    > estate.
    > And if the value of troubled assets were fully priced, then we would
    > not be going through the stress test exercise. Toxic assets are still
    > very much front and center.
    > AIG is a metaphor in other ways inasmuch as it returned the government
    > well, repeatedly, and is still in trouble; and it was unable to sell
    > good assets to generate cash. Restricted access to capital still
    > haunts this market as does doubts about government policy response.
    Mar 3, 2009. 12:37 PM | 1 Like Like |Link to Comment