Professor Elam

Well the GM Renault deal is dead if it ever had a chance.  Jerry Flint  didnt’ think so and has an interesting analysis of why auto mergers often fail.  And frankly that is true of most mergers.  Mergers tend to happen at stock market highs when folks are happy and inclusionary.  They almost never happen at stock market bottoms when such companies can be bought for a fraction those prices.  For example, Kinder Morgan energy was recently bought at a sky high price using leverage.  Ditto for Neiman Marcus and as I noted in a previous post, right out of the box, N-M lost money.  How will it do if the economy slows down?  Studying accounting allows one to understand the ramifications of buying high, and wishing you hadn’t!

There is a front page article in Saturday 10/7 WSJ,  about Jerome  York quitting the board. The stock dropped 6% in one day.  Why?  Again, studying accounting offers the answers and allows us to understand such takeover deals.  I think you will find the article interesting.