This week started with the spotlight in Detroit. GM and Ford were once again whining about healthcare costs related to building their products. If I hear this nonsense again, I’m going to be sick.
GM’s and Ford’s managements got themselves into the mess they are in, over time, all by themselves. And the mess didn’t start with healthcare costs, legacy or otherwise. It started with building cars for which people won’t pay the manufacturer’s list price in sufficient number to result in profitable operations.
So long as Rick Waggoner and Bill Ford continue to be in denial about this issue, their companies’ fortunes will continue to decline. Using smoke and mirrors to blame the UAW for their respective woes may seem clever. But big labor doesn’t design the cars at GM and Ford. Management does. And management also freely entered into the contracts which have saddled them with fringe benefits they now feel are unaffordable.
I’ve done quite a bit of research on drivers of consistently superior company performances, looking over long timeframes among many large-cap companies. The very best companies consistently grow revenues at high rates. This typically involves both repurchases by customers, as well as an ability to sustain price levels. This type of customer behavior, repurchasing and paying full price, is usually seen when a company adapts its offerings to evolving customer needs over time in a competitively-advantaged manner.
GM and Ford don’t appear to be able to do either one. That’s their real problem. Failure to solve this problem will overwhelm the resolution of any of their other apparent problems, including those involving workforce healthcare. Even if they did get resolution on the latter issue, they still are stuck with a management that continues to churn out unwanted cars that are unable to sustain their sticker prices.
It stems from losing their way with product design. Detroit just doesn’t seem to be able to develop very many new vehicles for which the market clamors in large numbers. And now, it’s ironic that the one class of vehicle for which they can get list, in large numbers, is suddenly losing value faster than you can say “SUV.” With current energy prices, this product class is going to be out of favor for a while.
Judging from where GM and Ford appear to be putting much of their energies these days, I’d say we’re going to be shy at least one major US-based car manufacturer before the decade is out. It may involve a merger among onshore rivals, if Congress is afraid to let so many UAW workers lose their jobs at once through a total financial failure of GM or Ford. But I'm willing to bet there will be one less automotive CEO in Detroit when 2010 dawns.
Thursday, October 06, 2005
Monday, October 03, 2005
Another Cinderella Story? Disney Under Iger
I read the Saturday Wall Street Journal’s piece on Bob Iger, Disney’s new CEO. After seeing some lackluster interviews with him on CNBC in the past year, I was pleasantly surprised to read that he actually has some very novel ideas.
Then again, the interviews were given while Eisner was still in power. Iger was probably justifiably wary of going the way of many next-in-line or newly-minted CEOs who radically change their predecessor’s game plans while the old boss is still too close for comfort.
Iger is doing some much-needed and laudable thinking about tearing up his business model before it is decimated by forces outside his control. It reminds me very much, by contrast, of my first post-grad school employer, AT&T. The latter never really seriously reacted to its business model’s many threats until it was far too late. From my own internal experience in telecom with AT&T, I can vouch for Iger’s instincts. It’s much better to gut your own business first, your way, losing a portion of your revenues, than to see it siphoned off to competitors and lose far more revenues and customers.
It also reminds me of one aspect of the primary research which led me to create my knowledge base of the operating characteristics of consistently superior companies. Applied for both consulting and equity portfolio management, it provides quantitative descriptions of how consistently superior firms, in terms of fundamental operating characteristics and stock price performance, differ from lesser-performing companies.
My initial inquiry dealt with how long a large-cap company could remain consistently superior. Without divulging proprietary findings, I can say that it’s less than a decade. And at a certain point, the odds of maintaining consistently superior performance dwindle quite suddenly. Which means, in the case of Disney, that Eisner’s value to the company ended long, long ago. Thus, the need for such a radical shake-up now by Iger.
One can examine several US large-cap success stories back over time, and typically find some CEO who stayed too long at the party. Sears, GE (twice), IBM, GM. They all required significant changes after one CEO's business model grew decrepit.
I’m looking forward to watching Iger’s next few years. Maybe Disney will be in my portfolio before long after all.
Then again, the interviews were given while Eisner was still in power. Iger was probably justifiably wary of going the way of many next-in-line or newly-minted CEOs who radically change their predecessor’s game plans while the old boss is still too close for comfort.
Iger is doing some much-needed and laudable thinking about tearing up his business model before it is decimated by forces outside his control. It reminds me very much, by contrast, of my first post-grad school employer, AT&T. The latter never really seriously reacted to its business model’s many threats until it was far too late. From my own internal experience in telecom with AT&T, I can vouch for Iger’s instincts. It’s much better to gut your own business first, your way, losing a portion of your revenues, than to see it siphoned off to competitors and lose far more revenues and customers.
It also reminds me of one aspect of the primary research which led me to create my knowledge base of the operating characteristics of consistently superior companies. Applied for both consulting and equity portfolio management, it provides quantitative descriptions of how consistently superior firms, in terms of fundamental operating characteristics and stock price performance, differ from lesser-performing companies.
My initial inquiry dealt with how long a large-cap company could remain consistently superior. Without divulging proprietary findings, I can say that it’s less than a decade. And at a certain point, the odds of maintaining consistently superior performance dwindle quite suddenly. Which means, in the case of Disney, that Eisner’s value to the company ended long, long ago. Thus, the need for such a radical shake-up now by Iger.
One can examine several US large-cap success stories back over time, and typically find some CEO who stayed too long at the party. Sears, GE (twice), IBM, GM. They all required significant changes after one CEO's business model grew decrepit.
I’m looking forward to watching Iger’s next few years. Maybe Disney will be in my portfolio before long after all.
Thursday, September 29, 2005
Time Warner & Microsoft- Strange Bedfellows Indeed
Yesterday's piece by Lee Gomes in the Wall Street Journal regarding technology company M&A activity was quite good. The title of this post borrows part of Mr. Gomes' title, referring to how some strange hookups have come to pass in the sector, to the regret of all but the investment bankers, who were paid regardless of the deals' outcomes.
However, the reason I'm writing this piece is that Mr. Gomes mentioned the current TimeWarner-Microsoft talks regarding sharing control and ownership of AOL.
Can you imagine Bill Gates and Steve Ballmer settling for less than controlling interest in AOL? Do you believe Dick Parsons wants those two controlling one of his major assets? The one which most seriously derailed his company over the past five years? Why are these two companies even considering trying to share control of AOL? TW has mismanaged it since the merger, yet won't spin it off. Would Microsoft seriously pay billions to run AOL without control? This strikes me as a recipe for further disaster for all involved.
However, the reason I'm writing this piece is that Mr. Gomes mentioned the current TimeWarner-Microsoft talks regarding sharing control and ownership of AOL.
Can you imagine Bill Gates and Steve Ballmer settling for less than controlling interest in AOL? Do you believe Dick Parsons wants those two controlling one of his major assets? The one which most seriously derailed his company over the past five years? Why are these two companies even considering trying to share control of AOL? TW has mismanaged it since the merger, yet won't spin it off. Would Microsoft seriously pay billions to run AOL without control? This strikes me as a recipe for further disaster for all involved.
I find the whole idea of these two aged titans, TimeWarner and Microsoft, struggling over control of a faded name in the internet product/market space, to be demonstrative of mediocre management. Both Microsoft and AOL were in my equity portfolio of consistently superior-performing large-cap companies in the late '90s. But neither has returned to that level of performance in this decade. Microsoft became predictable and less dynamic. AOL chose its peak market value, based on consistently superior performance, to unload itself to TimeWarner for a share of the latter's more tangible assets, at least on paper.
Gomes is right to point out that rarely do a combination of lesser-ranked competitors in technology sectors ever dethrone a market leader. That is because second-best tech companies are just that, and no amount of critical mass of their products will make them better than the leaders in terms of features, performance, etc.
It didn't happen in mainframes (Sperry, Univac, Honeywell, et.al.). Nor mini-computers. Nor PCs (how could we forget Carly Fiorina already? Compaq/Dec and HP). Nor software. It is unlikely to happen in online networks.
The prospect should make for some entertaining business news and corporate comedy in the months to come. But I doubt it will create any business which has a chance of attaining the sort of consistently excellent performance we look for in our equity portfolio holdings.
In Everyone’s Backyard
Is anyone in this country who votes and has a college education surprised at all with the Tom DeLay mess? And am I the only one who wonders how Texans have time for this nonsense right now? I thought they are supposed to be busy trying to convince the rest of us Americans, except for those next door in Louisiana, how badly they need help, a/k/a federal money, from the other states to recover from hurricane Rita? C’mon guys, get your scripts straight and stay on point!
All Politics is Local
First, let’s admit that US Representatives are about the most “normal” national-level politicians of the lot. They have to convince you every two years to let them go back to that hellish job they said they wanted, “representing” you in our lower Congressional house. Sort of like paying to be allowed into a kindergarten free-for-all every two years.
In the pecking order of Presidents, Senators, and Supreme Court Justices, these Representatives are most definitely the least polished, most unvarnished of the political breed. Everybody knows the seamy stories about US Reps from their district. All politics “is” local, and the same “constituent servicing” goes on in every district in every state in the country.
So What Else is New?
So I was bemused to learn that Tom DeLay allegedly was explicit in trading his support of a colleague’s son for a House seat, in exchange for the colleague’s vote on the medicare prescription drug benefit. This was evidently only one of a handful of times that the House “ethics,” and I use the word very loosely, committee has spoken out on Mr. DeLay’s actions.
I’m reminded that Texas has been most generous in delivering this type of political comedy to the nation. Remember Jim Wright’s heavily accented, “I will comply” with the House’s ethics committee’s demand that he come clean on his infamous book-buying-cum-campaign-financing scandal? Or Bobby Baker’s vegetable oil hoax?
By now, I'm old enough to consider the phrase "House Ethics Committee" an oxymoron. Who are they kidding? It's a political club with which to bash the other party's most effective leader.
We Get What We Deserve
Seriously, though, I think the true lesson in the Tom DeLay affair is the continuing stupidity in Washington with respect to campaign finance “reform” and regulation. When will we voters learn that these guys and gals we elect are just using our money to try to hamstring each other with so-called “campaign finance reforms” as they attempt to remain in office forever?
Let’s just admit that money is fungible. What DeLay and his colleagues evidently did seems perfectly sane and reasonable, given funding regulations. They took donations which were apparently illegal in Texas, sent them to their National Committee, and received funds back from said Committee. It may be laundering, but I can’t see how you could possibly write legislation that would make all and only such transactions illegal. If the people we elect to the House and Senate weren’t this clever, would we even want them there in the first place?
A Better Idea
You and I, as taxpayers, would be far better off if the pols we send to Washington would rescind all the current campaign finance laws and replace them with one. It’s a great idea which I read in the editorial pages of the Wall Street Journal during the Clinton years. Simply require that any funds donated to a campaign must be publicly reported, both at an electronic/internet site, and in a paper-based document, within 24 hours. The information required would be the amount, the donor, and the donor’s contact information. Then let the press have at it. I frankly don’t care if the head of the Chinese army donates money to Bill Clinton (wasn’t that rumored during his campaigns?), Tom DeLay or John Kerry. I just want to know about it. It would say far more about the candidate than many of his or her words and actions ever could.
All Politics is Local
First, let’s admit that US Representatives are about the most “normal” national-level politicians of the lot. They have to convince you every two years to let them go back to that hellish job they said they wanted, “representing” you in our lower Congressional house. Sort of like paying to be allowed into a kindergarten free-for-all every two years.
In the pecking order of Presidents, Senators, and Supreme Court Justices, these Representatives are most definitely the least polished, most unvarnished of the political breed. Everybody knows the seamy stories about US Reps from their district. All politics “is” local, and the same “constituent servicing” goes on in every district in every state in the country.
So What Else is New?
So I was bemused to learn that Tom DeLay allegedly was explicit in trading his support of a colleague’s son for a House seat, in exchange for the colleague’s vote on the medicare prescription drug benefit. This was evidently only one of a handful of times that the House “ethics,” and I use the word very loosely, committee has spoken out on Mr. DeLay’s actions.
I’m reminded that Texas has been most generous in delivering this type of political comedy to the nation. Remember Jim Wright’s heavily accented, “I will comply” with the House’s ethics committee’s demand that he come clean on his infamous book-buying-cum-campaign-financing scandal? Or Bobby Baker’s vegetable oil hoax?
By now, I'm old enough to consider the phrase "House Ethics Committee" an oxymoron. Who are they kidding? It's a political club with which to bash the other party's most effective leader.
We Get What We Deserve
Seriously, though, I think the true lesson in the Tom DeLay affair is the continuing stupidity in Washington with respect to campaign finance “reform” and regulation. When will we voters learn that these guys and gals we elect are just using our money to try to hamstring each other with so-called “campaign finance reforms” as they attempt to remain in office forever?
Let’s just admit that money is fungible. What DeLay and his colleagues evidently did seems perfectly sane and reasonable, given funding regulations. They took donations which were apparently illegal in Texas, sent them to their National Committee, and received funds back from said Committee. It may be laundering, but I can’t see how you could possibly write legislation that would make all and only such transactions illegal. If the people we elect to the House and Senate weren’t this clever, would we even want them there in the first place?
A Better Idea
You and I, as taxpayers, would be far better off if the pols we send to Washington would rescind all the current campaign finance laws and replace them with one. It’s a great idea which I read in the editorial pages of the Wall Street Journal during the Clinton years. Simply require that any funds donated to a campaign must be publicly reported, both at an electronic/internet site, and in a paper-based document, within 24 hours. The information required would be the amount, the donor, and the donor’s contact information. Then let the press have at it. I frankly don’t care if the head of the Chinese army donates money to Bill Clinton (wasn’t that rumored during his campaigns?), Tom DeLay or John Kerry. I just want to know about it. It would say far more about the candidate than many of his or her words and actions ever could.
Wednesday, September 28, 2005
The Hurricane Zone
A friend of mine and I were watching the news last week as coverage focused on hurricane Rita. The news story focused on the Galveston seawall, and how it would probably not be adequate to prevent flooding of the town, should Rita come ashore there.
This in a city famous for having been leveled in 1900 by a severe hurricane.
What is it about the Carolinas, Florida and the Gulf Coast? Living in a hurricane belt, you would think that the business owners and residents of the region would have shown more foresight regarding the potential damage from these storms when they build their facilities, homes and cities.
Take oil refineries, for example. I saw an interview with Lee Raymond of ExxonMobil on CNBC this week. He opined how until the past few weeks, he had never known how many experts on oil refineries there were in the US. That’s a pretty funny remark, until you let it sink in a bit.
You don’t have to be an expert at building or operating an oil refinery to realize that concentrating so much evidently unprotected, vulnerable capacity in a hurricane zone seems like inept business planning. The oil industry executives bemoan over-zealous environmental regulations, but the net effect of their decisions on refining capacity and locations over the years is to be unable to keep pace with the growth of their customers’ demands for refined petroleum products.
It’s easy to get lost in the thickets of how hard it is to build new refineries, pipelines, etc, thanks to various regulatory barriers. But from my perspective, it seems that the energy sector’s major mistake has simply been to underestimate demand, leaving them with barely adequate capacity at present, before the hurricanes affected the 25% or so of oil and gas production and refining that we are told are located in the Gulf region.
It’s not some evil conspiracy to drive up prices. Many, though not all, of these executives missed the boat on how Chinese and Indian demand would affect the global balance of supply and demand for carbon-based energy. I doubt they are happy to have unmet demand in this country right now.
As with many other business snafus, the real issue seems to be a simple deficit of capable business strategy and execution which take into account the realities of factors affecting supply and demand.
I’ll be touching on this subject again soon- how mediocrity in business management touches us all in unrealized ways.
This in a city famous for having been leveled in 1900 by a severe hurricane.
What is it about the Carolinas, Florida and the Gulf Coast? Living in a hurricane belt, you would think that the business owners and residents of the region would have shown more foresight regarding the potential damage from these storms when they build their facilities, homes and cities.
Take oil refineries, for example. I saw an interview with Lee Raymond of ExxonMobil on CNBC this week. He opined how until the past few weeks, he had never known how many experts on oil refineries there were in the US. That’s a pretty funny remark, until you let it sink in a bit.
You don’t have to be an expert at building or operating an oil refinery to realize that concentrating so much evidently unprotected, vulnerable capacity in a hurricane zone seems like inept business planning. The oil industry executives bemoan over-zealous environmental regulations, but the net effect of their decisions on refining capacity and locations over the years is to be unable to keep pace with the growth of their customers’ demands for refined petroleum products.
It’s easy to get lost in the thickets of how hard it is to build new refineries, pipelines, etc, thanks to various regulatory barriers. But from my perspective, it seems that the energy sector’s major mistake has simply been to underestimate demand, leaving them with barely adequate capacity at present, before the hurricanes affected the 25% or so of oil and gas production and refining that we are told are located in the Gulf region.
It’s not some evil conspiracy to drive up prices. Many, though not all, of these executives missed the boat on how Chinese and Indian demand would affect the global balance of supply and demand for carbon-based energy. I doubt they are happy to have unmet demand in this country right now.
As with many other business snafus, the real issue seems to be a simple deficit of capable business strategy and execution which take into account the realities of factors affecting supply and demand.
I’ll be touching on this subject again soon- how mediocrity in business management touches us all in unrealized ways.
Wednesday, September 21, 2005
Trading is an Addiction & Your Broker is the Pusher
What Is Active Management ?
A recent article in the Wall Street Journal caused me to consider what it means to actively manage an equity portfolio strategy in an environment in which brokerage analysts constantly vie to create “new information.”
Our strategy, Pathfinder, trades less often than many equity portfolios and funds. If new money is invested, it will be used to buy the most recent equity selections for that month. Otherwise, the strategy holds investments for approximately six months.
The more active part of our management is our constant monitoring of equity market performance in order to position ourselves long or short to the desired degree.
This approach results from rigorous analysis and a desire to employ an approach which combines both fundamental and technical information about the universe of S&P 500 stocks. To trade more frequently than quarterly would be to overweight technical information, as financial reports are released on a quarterly basis.
Another Source of “Information”
There is another source of fundamental “information.” It is the sell side analyst community. By the way, that reference, “sell side analyst,” tells you pretty much all you need to know regarding motivation. The article referred to earlier in this piece appeared in the August 29th issue of that newspaper, in section C- the financial news section. The essence of the article is that some homebuilder sector analysts have been releasing more than one report per day. In one case, an analyst actually published five reports in one day.
Isn’t that thoughtful of them? Otherwise, the major fundamental news would be a company’s quarterly report, or perhaps a sector-wide report issued periodically by some rather more objective institute. Or the monthly new and existing home sales figures. With this onslaught of reports, however, these institutional sell-side analysts are implicitly arguing that what they write is “new information,” necessitating reactions, in the form of trades, from their clients and prospects, the institutional fund managers. Isn’t it convenient that these analysts work for brokerage firms which just happen to have trading desks?
And let us not forget the ever-changing “ratings” activities. Accompanying the many written reports are the solemnly announced ratings of companies by sell-side brokerage analysts. These can vary from the simple “buy/sell/hold” variety to any of countless other categorization schemes. In a manner similar to report publishing, these ratings changes are intended to trigger a stampede of orders from institutional managers in response to the presumably objective changes. In reality, though, any change is beneficial to the analyst’s brokerage firm. It might be said, to use a familiar quote, “the more things change, the more they remain the same.” What “remains the same,” in this case, is the brokers’ revenue streams, in the face of institutional trading triggered by the ratings “changes.”
Mind you, we aren’t even talking about the M&A-related suspect research of the late ‘90s that triggered the Spitzer probes. In fact, in this case, the last thing these analysts want to do is make one large, unidirectional call. It’s far more profitable for a brokerage operation if the analysts activities cause frequent changes in direction, causing more trading as the “new information” flows from them.
The brokerages never directly charge the customers for this research. Instead, it is built into the cost of the trading desks which deliver the resulting trades. Since trading is capital intensive, volume increases due to analysts-driven trading yield the payoff to funding the analysts groups. The institutional customers pay indirectly, even at fractions of cents on the dollar per share traded, or in the bid/ask spread.
An Overlooked Effect
There is another, often overlooked second-order effect from this over-reporting of sector “information.” It is the conditioning of institutional managers, and fund-of-fund managers, to take it as an article of faith that actively managed funds or strategies need to be reacting to all this “information” flowing from the analysts. It is a timeless effect. Somewhere, analysts are pumping out “new information” for the sector du jour of interest. Yesterday it may have been home building. Today it might be energy. Tomorrow- who knows? But rest assured, some sector is always ripe for over-reporting and a steady flow of information on which trades are therefore expected to be made in reaction. If you aren’t trading on constantly-flowing analysts’ reports, you’re just not an “active” portfolio manager.
Where’s the Beef?
What is missing, though, is an objective analysis of whether all this type of “new information” actually constitutes value which can be used to change portfolio positions profitably. There are no studies of which we are aware showing that frequent trading, trimming positions with every jot and tittle of some analyst’s pen, will actually improve fund returns. In fact, the blizzard of analyst reports looks very self-serving for the brokerage firms which employ them. By addicting institutional investors to the steady flow of “research” and “ratings changes,” the analysts help assure a steady flow in the other direction of trades by institutional customers in reaction to the apparent “new information.”
For example, during the week of October 7, 2004, an analyst at one fairly well-known brokerage trashed the entire homebuilding sector. Pulte’s return for the period, from July, plunged from 18% to –3% in a week. It further deepened to –6% the following week. After quarterly results were released later that month, Pulte rocketed back 16% return points in two days. First on news of Toll Brothers blowout quarterly results, and then the next day on Pulte’s own quarterly report. By December 17th, it was back up to a 22% return for the holding period, where it finished the year. Golden West also recovered to a period-near-high of 17%.
So the analyst caused a temporary plunge with ‘new’ information which turned out to be wrong. The market corrected back to its original valuation. How much trading occurred in the interim to drive the prices down, then up? Who gained from that? Well, regardless of the timing of the institutional buys and sells, we know the brokerage firms profited from this little episode. No doubt it is repeated many times each quarter throughout many sectors.
When you think about it, being right isn’t actually all that good for an analyst’s employer. Better, from a trading volume perspective, to cause a change in price in both directions of a stock, rather than correctly signal only one move.
Effective “Active” Management
What puzzles me is why, in the absence of published evidence that frequent, sell-side-analyst-caused trading increases net returns to portfolio managers, more institutional fund allocators and managers don’t frown upon such “active” management.
Why is holding positions for more than a month seen as being a “passive” manager? In the case of Pathfinder, it is a conscious, empirically-research based choice to pursue the accumulation of returns and lower trading expenses. Trading more frequently than quarterly drives a strategy to become technically-based, i.e., defined purely by market price moves. This is where the analysts’ reports come in. By creating a constant flow of “information” with which to affect stock prices, the analysts create trading revenues for their institutional equity desks, while also creating a climate in which managers and investors expect frequent rebalancing and trading as the norm, rather than the exception.
At Performance Research Associates we eschew this frequent-trading approach. Instead, we base our selections and holding periods on longer-time-framed signals and measures. Actively managing Pathfinder means we continually monitor the market for long/short allocation signals to drive that decision, because it is a particularly important and value-laden one. We also monitor positions on a daily basis in order to better understand how economic and company-specific news affects our portfolio selections. However, within existing long/short allocations, we remain confident in our selections, daily ‘new’ analyst-provided information notwithstanding.
We believe the results of equity portfolio management are what count, not the frequency of the trading or investing which produces those results.
A recent article in the Wall Street Journal caused me to consider what it means to actively manage an equity portfolio strategy in an environment in which brokerage analysts constantly vie to create “new information.”
Our strategy, Pathfinder, trades less often than many equity portfolios and funds. If new money is invested, it will be used to buy the most recent equity selections for that month. Otherwise, the strategy holds investments for approximately six months.
The more active part of our management is our constant monitoring of equity market performance in order to position ourselves long or short to the desired degree.
This approach results from rigorous analysis and a desire to employ an approach which combines both fundamental and technical information about the universe of S&P 500 stocks. To trade more frequently than quarterly would be to overweight technical information, as financial reports are released on a quarterly basis.
Another Source of “Information”
There is another source of fundamental “information.” It is the sell side analyst community. By the way, that reference, “sell side analyst,” tells you pretty much all you need to know regarding motivation. The article referred to earlier in this piece appeared in the August 29th issue of that newspaper, in section C- the financial news section. The essence of the article is that some homebuilder sector analysts have been releasing more than one report per day. In one case, an analyst actually published five reports in one day.
Isn’t that thoughtful of them? Otherwise, the major fundamental news would be a company’s quarterly report, or perhaps a sector-wide report issued periodically by some rather more objective institute. Or the monthly new and existing home sales figures. With this onslaught of reports, however, these institutional sell-side analysts are implicitly arguing that what they write is “new information,” necessitating reactions, in the form of trades, from their clients and prospects, the institutional fund managers. Isn’t it convenient that these analysts work for brokerage firms which just happen to have trading desks?
And let us not forget the ever-changing “ratings” activities. Accompanying the many written reports are the solemnly announced ratings of companies by sell-side brokerage analysts. These can vary from the simple “buy/sell/hold” variety to any of countless other categorization schemes. In a manner similar to report publishing, these ratings changes are intended to trigger a stampede of orders from institutional managers in response to the presumably objective changes. In reality, though, any change is beneficial to the analyst’s brokerage firm. It might be said, to use a familiar quote, “the more things change, the more they remain the same.” What “remains the same,” in this case, is the brokers’ revenue streams, in the face of institutional trading triggered by the ratings “changes.”
Mind you, we aren’t even talking about the M&A-related suspect research of the late ‘90s that triggered the Spitzer probes. In fact, in this case, the last thing these analysts want to do is make one large, unidirectional call. It’s far more profitable for a brokerage operation if the analysts activities cause frequent changes in direction, causing more trading as the “new information” flows from them.
The brokerages never directly charge the customers for this research. Instead, it is built into the cost of the trading desks which deliver the resulting trades. Since trading is capital intensive, volume increases due to analysts-driven trading yield the payoff to funding the analysts groups. The institutional customers pay indirectly, even at fractions of cents on the dollar per share traded, or in the bid/ask spread.
An Overlooked Effect
There is another, often overlooked second-order effect from this over-reporting of sector “information.” It is the conditioning of institutional managers, and fund-of-fund managers, to take it as an article of faith that actively managed funds or strategies need to be reacting to all this “information” flowing from the analysts. It is a timeless effect. Somewhere, analysts are pumping out “new information” for the sector du jour of interest. Yesterday it may have been home building. Today it might be energy. Tomorrow- who knows? But rest assured, some sector is always ripe for over-reporting and a steady flow of information on which trades are therefore expected to be made in reaction. If you aren’t trading on constantly-flowing analysts’ reports, you’re just not an “active” portfolio manager.
Where’s the Beef?
What is missing, though, is an objective analysis of whether all this type of “new information” actually constitutes value which can be used to change portfolio positions profitably. There are no studies of which we are aware showing that frequent trading, trimming positions with every jot and tittle of some analyst’s pen, will actually improve fund returns. In fact, the blizzard of analyst reports looks very self-serving for the brokerage firms which employ them. By addicting institutional investors to the steady flow of “research” and “ratings changes,” the analysts help assure a steady flow in the other direction of trades by institutional customers in reaction to the apparent “new information.”
For example, during the week of October 7, 2004, an analyst at one fairly well-known brokerage trashed the entire homebuilding sector. Pulte’s return for the period, from July, plunged from 18% to –3% in a week. It further deepened to –6% the following week. After quarterly results were released later that month, Pulte rocketed back 16% return points in two days. First on news of Toll Brothers blowout quarterly results, and then the next day on Pulte’s own quarterly report. By December 17th, it was back up to a 22% return for the holding period, where it finished the year. Golden West also recovered to a period-near-high of 17%.
So the analyst caused a temporary plunge with ‘new’ information which turned out to be wrong. The market corrected back to its original valuation. How much trading occurred in the interim to drive the prices down, then up? Who gained from that? Well, regardless of the timing of the institutional buys and sells, we know the brokerage firms profited from this little episode. No doubt it is repeated many times each quarter throughout many sectors.
When you think about it, being right isn’t actually all that good for an analyst’s employer. Better, from a trading volume perspective, to cause a change in price in both directions of a stock, rather than correctly signal only one move.
Effective “Active” Management
What puzzles me is why, in the absence of published evidence that frequent, sell-side-analyst-caused trading increases net returns to portfolio managers, more institutional fund allocators and managers don’t frown upon such “active” management.
Why is holding positions for more than a month seen as being a “passive” manager? In the case of Pathfinder, it is a conscious, empirically-research based choice to pursue the accumulation of returns and lower trading expenses. Trading more frequently than quarterly drives a strategy to become technically-based, i.e., defined purely by market price moves. This is where the analysts’ reports come in. By creating a constant flow of “information” with which to affect stock prices, the analysts create trading revenues for their institutional equity desks, while also creating a climate in which managers and investors expect frequent rebalancing and trading as the norm, rather than the exception.
At Performance Research Associates we eschew this frequent-trading approach. Instead, we base our selections and holding periods on longer-time-framed signals and measures. Actively managing Pathfinder means we continually monitor the market for long/short allocation signals to drive that decision, because it is a particularly important and value-laden one. We also monitor positions on a daily basis in order to better understand how economic and company-specific news affects our portfolio selections. However, within existing long/short allocations, we remain confident in our selections, daily ‘new’ analyst-provided information notwithstanding.
We believe the results of equity portfolio management are what count, not the frequency of the trading or investing which produces those results.
Who Should Decide How To Rebuild New Orleans ?
First, let me state that it’s terrible that hurricane Katrina killed people in the Gulf states and caused so much property damage. The loss of life is a tragedy.
Now, the greater than $100B question- who should have the most, or deciding, say in how New Orleans is rebuilt?
If you are reading this, there is a 98% chance that you live in one of the states that is expected to be paying to rebuild New Orleans, but not in Louisiana. And there is a 99.8%, literally, that you don’t, or didn’t, even live in New Orleans. So that means chances are very good that your tax dollars are expected to rebuild a city you don’t directly support in your own state. Illinois has its Chicago, and New York state, its namesake city. Massachusetts supports Boston. I’m sure there are similar examples in other states as well.
But a whole country to support one city?
Does it makes sense that the city of New Orleans, and its state, which together couldn’t manage to keep it safe from reasonably expected hurricane exposure in the first place, are the groups who should have the final say in rebuilding it with other people’s money?
Nevermind that by requesting, or expecting, the rebuilding of the entire city, more or less, on a federal tab, they are already living beyond their means. I guess that’s federalism at work, like it or not.
Personally, I’d have a lot more respect for the government of the city of New Orleans, and the state of Louisiana, if they asked for federal loan guarantees, rather than direct grants and aid. For crying out loud, can't the local and state governments show some pride and initiative in this?
If they want the final say in rebuilding their city, then let them earn it. Ask for help borrowing capital that they will repay with a revitalized port, energy-related commercial zone and tourism areas that are safe and survivable. Rather than issuing demands that the rest of us, through the conduit of the federal government, simply hand over more than $100B to those government entities to spend as they wish. It takes a lot of gall to request/demand $100B to rebuild a city that wasn't safe in the first place, while seeming to stiff-arming the very people from whom they want the money when questioned as to how and why the reconstruction is to take place.
After all we have heard regarding the importance of the area to agricultural transport, energy production and distribution, and other general shipping needs, I don’t understand why the local and state governments can’t borrow against their infrastructure-based revenues to rebuild. I’d prefer to see the funds coming from increased prices paid for goods passing through that region to pay for the new and improved facilities, funded by bonds, than to simply hand over $100B to local and state governmental authorities.
Nobody questions the need and value or rebuilding damaged commercial infrastructure to standards which can better withstand a major hurricane, so long as that cost is economically rational. Either private or public revenue-backed bonds would seem to be feasible. If they can't attract capital, based upon the expected costs and revenues of improved and repaired facilities, then it begs the question of rebuilding commercial facilities there in the first place. What seems to be more in doubt is what kind of residential reconstruction is reasonable. Holman Jenkins wrote an excellent editorial about this in the Wall Street Journal two weeks ago.
I think Dennis Hastert had it right when he questioned whether the United States ought to be reconstructing a city which lies inside a below-water bathtub of levees. In the interest of full disclosure, by the way, I hail from Hastert’s state, Illinois. But that notwithstanding, I admire his comments. As the Speaker of the House of Representatives, the “people’s house” where spending bills originate, he is the ideal elected public official to voice such thoughts. He speaks for the 98% of us, from 49 other states, who wonder why, if we are going to substantially rebuild the city of New Orleans, those of us being asked to pay the tab don’t get to decide how it will be done.
Now, the greater than $100B question- who should have the most, or deciding, say in how New Orleans is rebuilt?
If you are reading this, there is a 98% chance that you live in one of the states that is expected to be paying to rebuild New Orleans, but not in Louisiana. And there is a 99.8%, literally, that you don’t, or didn’t, even live in New Orleans. So that means chances are very good that your tax dollars are expected to rebuild a city you don’t directly support in your own state. Illinois has its Chicago, and New York state, its namesake city. Massachusetts supports Boston. I’m sure there are similar examples in other states as well.
But a whole country to support one city?
Does it makes sense that the city of New Orleans, and its state, which together couldn’t manage to keep it safe from reasonably expected hurricane exposure in the first place, are the groups who should have the final say in rebuilding it with other people’s money?
Nevermind that by requesting, or expecting, the rebuilding of the entire city, more or less, on a federal tab, they are already living beyond their means. I guess that’s federalism at work, like it or not.
Personally, I’d have a lot more respect for the government of the city of New Orleans, and the state of Louisiana, if they asked for federal loan guarantees, rather than direct grants and aid. For crying out loud, can't the local and state governments show some pride and initiative in this?
If they want the final say in rebuilding their city, then let them earn it. Ask for help borrowing capital that they will repay with a revitalized port, energy-related commercial zone and tourism areas that are safe and survivable. Rather than issuing demands that the rest of us, through the conduit of the federal government, simply hand over more than $100B to those government entities to spend as they wish. It takes a lot of gall to request/demand $100B to rebuild a city that wasn't safe in the first place, while seeming to stiff-arming the very people from whom they want the money when questioned as to how and why the reconstruction is to take place.
After all we have heard regarding the importance of the area to agricultural transport, energy production and distribution, and other general shipping needs, I don’t understand why the local and state governments can’t borrow against their infrastructure-based revenues to rebuild. I’d prefer to see the funds coming from increased prices paid for goods passing through that region to pay for the new and improved facilities, funded by bonds, than to simply hand over $100B to local and state governmental authorities.
Nobody questions the need and value or rebuilding damaged commercial infrastructure to standards which can better withstand a major hurricane, so long as that cost is economically rational. Either private or public revenue-backed bonds would seem to be feasible. If they can't attract capital, based upon the expected costs and revenues of improved and repaired facilities, then it begs the question of rebuilding commercial facilities there in the first place. What seems to be more in doubt is what kind of residential reconstruction is reasonable. Holman Jenkins wrote an excellent editorial about this in the Wall Street Journal two weeks ago.
I think Dennis Hastert had it right when he questioned whether the United States ought to be reconstructing a city which lies inside a below-water bathtub of levees. In the interest of full disclosure, by the way, I hail from Hastert’s state, Illinois. But that notwithstanding, I admire his comments. As the Speaker of the House of Representatives, the “people’s house” where spending bills originate, he is the ideal elected public official to voice such thoughts. He speaks for the 98% of us, from 49 other states, who wonder why, if we are going to substantially rebuild the city of New Orleans, those of us being asked to pay the tab don’t get to decide how it will be done.
Tuesday, September 20, 2005
Wal-Mart and the Wheel of Retailing
Did you read the piece about Wal-Mart in the Wall Street Journal’s first weekend issue on Saturday? Am I the only person who doesn’t understand why Wal-Mart thinks it can trade-up from being the nation’s largest purveyor of cheap, bulk provisions to the masses to being a destination for those seeking fashion, style and upscale wares?
Back when I was earning my degrees in Marketing, there was a theory which was taught that went by the name of “the wheel of retailing.” It essentially observed that every so often, a new, low-cost retailer will arise that rips through the existing sector structure like a hot knife through butter, growing at the expense of outmoded, expensive older giants.
In the 1920s in hard goods, it was Sears. In the 1930s, in groceries, it was The Atlantic & Pacific Tea Company, a/k/a A&P. In fact, so virulent was A&P’s impact on the world of small, neighborhood grocers that the Robinson-Patman Act of 1934 was informally known as “the anti-A&P Act.”
That said, the Wal-Mart saga since the 1980s is both remarkable, yet not surprising. What the company did is not all that new. It upended several existing chains of general merchandisers who had grown inefficient, insensitive to consumer needs and wants, and basically moribund. How it did it was with the latest version of what the lowest entrants on the wheel of retailing always use- low-cost supply of large volumes of goods. It looks glitzier now, with integrated IT functions shared among vendors. But if you go back to the architect of Sears’ great transformation, you will find that Robert Wood, the creator of that transformation, learned his supply skills as quartermaster on the Panama Canal, one of the more challenging logistical projects of that era.
What is puzzling me is why there is all this attention paid to the mid-late life growth pangs of a retail success. Retailers who began life at the bottom always try to extend growth, once they saturate the market with stores, by moving up-market. And they nearly always fail in doing so.
So will Wal-Mart. The company appeared briefly as a selection in the large-cap equity portfolio I manage. That was back in the 90s. But it hasn’t performed in a consistently superior fashion in over a decade.
If Wal-Mart really wants to move up-market, they should do what Les Wexner did with The Limited. He employed a strategy of buying different brands to move out of the original retail niche in which The Limited succeeded. Wal-Mart could probably employ its size and legendary logistics acumen to vault some existing fashion brands into the big leagues, and at the same time, bring better financial management to them. And attract the more upscale consumers it now seeks, albeit through doors with other brand names on them.
Whether they do or not, at least they would have a fighting chance with both customer segments- the current Wal-Mart shopper, and the fashion-conscious shoppers who now move up to Target and Kohls. It’s not like Wal-Mart is aiming at uncharted, nor vacant, product/market territory.
Back when I was earning my degrees in Marketing, there was a theory which was taught that went by the name of “the wheel of retailing.” It essentially observed that every so often, a new, low-cost retailer will arise that rips through the existing sector structure like a hot knife through butter, growing at the expense of outmoded, expensive older giants.
In the 1920s in hard goods, it was Sears. In the 1930s, in groceries, it was The Atlantic & Pacific Tea Company, a/k/a A&P. In fact, so virulent was A&P’s impact on the world of small, neighborhood grocers that the Robinson-Patman Act of 1934 was informally known as “the anti-A&P Act.”
That said, the Wal-Mart saga since the 1980s is both remarkable, yet not surprising. What the company did is not all that new. It upended several existing chains of general merchandisers who had grown inefficient, insensitive to consumer needs and wants, and basically moribund. How it did it was with the latest version of what the lowest entrants on the wheel of retailing always use- low-cost supply of large volumes of goods. It looks glitzier now, with integrated IT functions shared among vendors. But if you go back to the architect of Sears’ great transformation, you will find that Robert Wood, the creator of that transformation, learned his supply skills as quartermaster on the Panama Canal, one of the more challenging logistical projects of that era.
What is puzzling me is why there is all this attention paid to the mid-late life growth pangs of a retail success. Retailers who began life at the bottom always try to extend growth, once they saturate the market with stores, by moving up-market. And they nearly always fail in doing so.
So will Wal-Mart. The company appeared briefly as a selection in the large-cap equity portfolio I manage. That was back in the 90s. But it hasn’t performed in a consistently superior fashion in over a decade.
If Wal-Mart really wants to move up-market, they should do what Les Wexner did with The Limited. He employed a strategy of buying different brands to move out of the original retail niche in which The Limited succeeded. Wal-Mart could probably employ its size and legendary logistics acumen to vault some existing fashion brands into the big leagues, and at the same time, bring better financial management to them. And attract the more upscale consumers it now seeks, albeit through doors with other brand names on them.
Whether they do or not, at least they would have a fighting chance with both customer segments- the current Wal-Mart shopper, and the fashion-conscious shoppers who now move up to Target and Kohls. It’s not like Wal-Mart is aiming at uncharted, nor vacant, product/market territory.
Saturday, September 17, 2005
When Analysts Become Useless
Have you noticed the incredible split in the way major energy firms are managing themselves recently? ExxonMobil won't bid for new reserves. It's retiring chairman, the veteran Lee Raymond, opines that the price of a barrel of oil will eventually re-settle near $40, and everyone paying an effective takeover premium above that for reserves is making a major strategic error.
Meanwhile, Valero is buying up more refining assets, and now, even Canadian oil sands. At prices that indicate they believe energy prices are heading upward for a sustained time period.
Who is right? Both companies, and several of their competitors, are run by smart, veteran leaders with a lot of common sense and experience. It's really tough, from the outside, to know who is right. And someone clearly has to be right, or wrong, in this kind of situation.
What I do know, though, is that it makes virtually no sense to rely on any "analysts" in the brokerage community to add one iota of value to the analysis of this situation. Who would you rather listen to for your raw information- leaders of the major players in the sector, or outside observers with no industry experience who are paid for generating uncertainty, and, thus, trading income for their brokerage houses?
Not such a tough call, is it, when you put it that way?
Sure, sources like Daniel Yergin or other veteran managers or non-financial-sector observers are worth hearing out. But the uncertainty in this sector right now is not about abstruse technical analysis of financial asset price movements. Nor about customer behavior. It has more to do with assessments of global demand, the price inelasticities of that demand, the geopolitical dimensions of some of that demand, and the very real and gritty business of finding and producing crude oil and natural gas.
So who really believes any of the Street oil and gas analysts can add any value to what the the guys in the drivers' seats of the big players in this sector are already saying, and doing?
One industry veteran put it this way. Those energy producers who believe prices will fall back to pre-summer levels are behaving according to an implicit belief in the late Julian Simon's theory that commodity prices rise and fall to assure a near-constant time period of supply of any important basic commodity. That was the core of his famous bet with Paul Ehrlich over twenty years ago.
Those energy producers who are betting on higher prices implicitly believe that we have finally reached a peak of production of existing carbon-based energy sources. Ironically, deals like Valero's recent purchase of Canadian oil sands could well be the sort of action that will once again prove the other group of producers, and Julian Simon, correct.
For my money, I'm focusing on the actions of the major sector players, and the global economic demands on their products. Who needs biased brokerage analysts to interpret such clear cut information?
Meanwhile, Valero is buying up more refining assets, and now, even Canadian oil sands. At prices that indicate they believe energy prices are heading upward for a sustained time period.
Who is right? Both companies, and several of their competitors, are run by smart, veteran leaders with a lot of common sense and experience. It's really tough, from the outside, to know who is right. And someone clearly has to be right, or wrong, in this kind of situation.
What I do know, though, is that it makes virtually no sense to rely on any "analysts" in the brokerage community to add one iota of value to the analysis of this situation. Who would you rather listen to for your raw information- leaders of the major players in the sector, or outside observers with no industry experience who are paid for generating uncertainty, and, thus, trading income for their brokerage houses?
Not such a tough call, is it, when you put it that way?
Sure, sources like Daniel Yergin or other veteran managers or non-financial-sector observers are worth hearing out. But the uncertainty in this sector right now is not about abstruse technical analysis of financial asset price movements. Nor about customer behavior. It has more to do with assessments of global demand, the price inelasticities of that demand, the geopolitical dimensions of some of that demand, and the very real and gritty business of finding and producing crude oil and natural gas.
So who really believes any of the Street oil and gas analysts can add any value to what the the guys in the drivers' seats of the big players in this sector are already saying, and doing?
One industry veteran put it this way. Those energy producers who believe prices will fall back to pre-summer levels are behaving according to an implicit belief in the late Julian Simon's theory that commodity prices rise and fall to assure a near-constant time period of supply of any important basic commodity. That was the core of his famous bet with Paul Ehrlich over twenty years ago.
Those energy producers who are betting on higher prices implicitly believe that we have finally reached a peak of production of existing carbon-based energy sources. Ironically, deals like Valero's recent purchase of Canadian oil sands could well be the sort of action that will once again prove the other group of producers, and Julian Simon, correct.
For my money, I'm focusing on the actions of the major sector players, and the global economic demands on their products. Who needs biased brokerage analysts to interpret such clear cut information?
Thursday, September 15, 2005
Promises, Promises......
Two major US airlines filed for bankruptcy protection this week- Northwest and Delta. In the former case, their machinists union is already on strike.
What I find ironic is that, while so much of this week’s, and many prior years’ focus, is on union leaders squaring off against company managements, nobody has bothered to ask how it is that the unions got themselves in this mess in the first place?
Why did unions ever begin taking future pension contributions from the companies for which their members worked, instead of cash compensation?
When you think about it, some of those company CEOs of yesteryear were deceptively brilliant. They managed to get unsecured loans, in the form of future pension “obligations,” from the unions representing their workers. No bank would have lent the same sums on the same terms for the same prices. That’s because, ultimately, companies have much more latitude with which to discharge or change their pension obligations in bankruptcy than they have to escape a group of angry, unified, legally-empowered financial creditors in the same situation.
Why is this relevant today? For two reasons. First, it’s the private sector version of the social security mess. What makes sense and works here should inform our solutions for social security. Second, it should inform labor’s current choices and negotiations, so as not to make the same mistakes twice. Especially now, in the airline and automobile manufacturing sectors.
In hindsight, “defined benefit” plans of any type or name, public or private, are a clever way for a public corporation or a government to fund operations with implicit loans. For big steel, autos and airlines, as well as other labor-intensive sectors in the ‘50s, ‘60s and later, this amounted to labor union members lending, via unsecured future compensation and fringe benefit promises from their employers, sums of money for which they had no collateral. Financial engineering which puts modern investment bankers to shame.
Where is the expose on the union leaders who foolishly negotiated, on behalf of their members, to accept unsecured IOUs from companies on terms that the companies’ banks would never have lent them the money?
Why would any of the current unionized employees of Northwestern, Delta, Ford or GM accept any non-cash compensation going forward?
What I find ironic is that, while so much of this week’s, and many prior years’ focus, is on union leaders squaring off against company managements, nobody has bothered to ask how it is that the unions got themselves in this mess in the first place?
Why did unions ever begin taking future pension contributions from the companies for which their members worked, instead of cash compensation?
When you think about it, some of those company CEOs of yesteryear were deceptively brilliant. They managed to get unsecured loans, in the form of future pension “obligations,” from the unions representing their workers. No bank would have lent the same sums on the same terms for the same prices. That’s because, ultimately, companies have much more latitude with which to discharge or change their pension obligations in bankruptcy than they have to escape a group of angry, unified, legally-empowered financial creditors in the same situation.
Why is this relevant today? For two reasons. First, it’s the private sector version of the social security mess. What makes sense and works here should inform our solutions for social security. Second, it should inform labor’s current choices and negotiations, so as not to make the same mistakes twice. Especially now, in the airline and automobile manufacturing sectors.
In hindsight, “defined benefit” plans of any type or name, public or private, are a clever way for a public corporation or a government to fund operations with implicit loans. For big steel, autos and airlines, as well as other labor-intensive sectors in the ‘50s, ‘60s and later, this amounted to labor union members lending, via unsecured future compensation and fringe benefit promises from their employers, sums of money for which they had no collateral. Financial engineering which puts modern investment bankers to shame.
Where is the expose on the union leaders who foolishly negotiated, on behalf of their members, to accept unsecured IOUs from companies on terms that the companies’ banks would never have lent them the money?
Why would any of the current unionized employees of Northwestern, Delta, Ford or GM accept any non-cash compensation going forward?
Early Trend & Issue Identifications In This Blog
Topic Date
Link Date
Kraft announces plan to split company along snack/grocery business lines, effectively nullifying the expensive, time-consuming Cadbury acquisition of 2009-2010.
here 24 September 2009
Alcatel Purchase of Lucent To Fail 08 October 2007
here 03 April 2006"Wal-Mart Era" Declared Over in Wall Street Journal Feature Column 03 October 2007
here 20 September, 2005
Michael Dell Admits Direct Sale Model May Be Outmoded 28 April 2007here 15 May 2006
Shareholder Participation in Private Equity Buyouts 28 April 2007here 01 August 2006
GM & Ford Solvency Issues Spring 2006here 06 October 2005
Split GE Into Its Constituent Parts 28 April 2007 (Citi analyst)
here 03 August 2006
Detroit Big Three Change of Control or Ownership 14 May 2007 (Chrysler sale)
here 06 October 2005
Wal-Mart Retail Strategy/Segmentation Failure Fall 2006
here 20 September 2005
Yahoo's Strategic Drift and Looming Crisis Summer 2006
Terry Semel Resigns June 2007here 28 August 2006
Southwest Airlines Strategic Mistake In Pursuing Growth
here 01 December 2005
Link Date
Kraft announces plan to split company along snack/grocery business lines, effectively nullifying the expensive, time-consuming Cadbury acquisition of 2009-2010.
here 24 September 2009
Alcatel Purchase of Lucent To Fail 08 October 2007
here 03 April 2006"Wal-Mart Era" Declared Over in Wall Street Journal Feature Column 03 October 2007
here 20 September, 2005
Michael Dell Admits Direct Sale Model May Be Outmoded 28 April 2007here 15 May 2006
Shareholder Participation in Private Equity Buyouts 28 April 2007here 01 August 2006
GM & Ford Solvency Issues Spring 2006here 06 October 2005
Split GE Into Its Constituent Parts 28 April 2007 (Citi analyst)
here 03 August 2006
Detroit Big Three Change of Control or Ownership 14 May 2007 (Chrysler sale)
here 06 October 2005
Wal-Mart Retail Strategy/Segmentation Failure Fall 2006
here 20 September 2005
Yahoo's Strategic Drift and Looming Crisis Summer 2006
Terry Semel Resigns June 2007here 28 August 2006
Southwest Airlines Strategic Mistake In Pursuing Growth
here 01 December 2005
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