Professor Elam

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  • Professor Elam

    Frothy Valuations

    Monday Sept 13 2021

    Andy Kessler has been warning of excessive valuations in his WSJ column for weeks. This weekend we detailed the lack of breadth  in the face o f higher averages. Here is part of his column today.

     

     
     
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    A Joby Aviation aircraft outside the New York Stock Exchange during the company's initial public offering in New York, Aug. 11.

    Photo: Michael Nagle/Bloomberg News

     
     
     

    Joby Aviation, which plans to begin an electric air taxi service in 2024, is worth more than Lufthansa, EasyJet or JetBlue. Does that seem right? In this market, why not? Heck, earlier this year, Tesla was worth more than the next nine car manufacturers combined, though now only the next six. Beyond Meat, made with pea protein, is worth more than the entire market for peas eaten globally—like the bumper sticker says: Imagine whirled peas. Do fundamentals even matter?

    I can go on. Used-car sales platform Carvana is worth more than Volvo, Honda, Ford or Hyundai. Airbnb is worth more than Marriott and Hilton combined. Crypto-exchange Coinbase is worth more than the Nasdaq. I live at the intersection of innovation and disruption, but when companies are worth more than any possible reality, watch out.

    How about those meme stocks still getting hyped on Reddit’s WallStreetBets? Those who bid GameStop shares into the stratosphere waved at Virgin Galactic Holdings as they soared by. A year ago, the stock was $6 and it is now $190—some dupes paid $483, game over. Short sellers Melvin Capital, Point 72 and D1 Capital focused on fundamentals and got their assets handed to them. Shorts lost more than $9 billion between January and June.

    New Chairman Ryan Cohen, who is driving change at GameStop, may be a retail genius for turning around Chewy, but Redditors may want to put in a call to hedge-fund manager Eddie Lampert, who bought Kmart and merged it with Sears in 2005, as a highly touted “integrated retail” play, combining stores and online sales, eerily similar to the argument for investing in GameStop today. The stock peaked at $135 in 2007. It is now at $0.30 as the company languishes in bankruptcy. A 1970s Sears Johnny Miller leisure suit is worth more.

  • Professor Elam

    SA CPA Career Day

    Weekend Sept  12 2021

    SEPTEMBER 2021
     
    Dive In! to a Sea of Opportunity
    with TXCPA-San Antonio
     
    Dear Future CPA,
     
    You're invited to join the Texas Society of CPAs-San Antonio Chapter for the 2021 Virtual Accounting Careers Workshop
     
    Call or e-mail now to attend this free virtual Workshop on Friday, September 24, between 5:30-7 p.m. Registration details available by clicking the link.
     
     
     
    Sign up to attend and receive the Zoom link — call 210-828-2722/toll free 888-828-8680 or e-mail Amanda@txcpasa.cpa — and include your full name, university affiliation and e-mail address.
     
    Texas Society of CPAs-San Antonio Chapter | 210-828-2722/toll free 888-828-8680 | info@sacpasociety.com | https://www.tx.cpa/sanantonio
     
     

  • Professor Elam

    Negative Mood on the Rise

    Weekend Sept 11 2021

    9/10/21

    Oil Prices Firm

    Nearly four-fifths of US energy production in the Gulf remained offline ten days after Hurricane Ida.

     

    Storm’s Fallout Cripples US Oil Output, Sept. 9, 2021

    Prices have firmed as result of Hurricane Ida. We had thought price would work lower but that has not been the case. After hitting a low of 15%, the some 41% of energy stocks are now in bullish position.

    We were correct about overall stock market weakness into September.   The most reliable indicator, the NYSE Advance-Decline line has been moving sideways since July. The broader market is far weaker than the weighted average major indexes indicate. An example is that the percent of stocks over their 150 day Moving Average has fallen from 95% in April to 65% today.

    We have remarked that increasing negative social mood does not support the high stock valuations. Here are a few recent examples of explosions.

    President Biden tells 18 Trump appointees to Military Academy Boards to quit or be terminated. Kellyanne Conway refused, prompting this comment from AOC. When you’re fired, don’t let the fascist victim complex hit you on the way out.  Is that called reaching across the aisle?

    The Republican Texas Legislature passed a law banning all abortions after six weeks pregnancy. There is no middle ground on this issue with Democrats for the procedure anytime. Expect more heated exchanges with no positive outcome.

    America never got close to Jimmy Carter’s 20% of energy from solar by year 2000. So Team Biden plans 44% by 2050, price tag $562 Billion.

    Wiser minds in the wake of Hurricane Ida note it would have been impossible to drive electric vehicles through high water. Worse, it would have been impossible to re-charge them with power outages across Louisiana. Will the Energy Secretary please take note?

    Taliban 2.0 (a professional government according to our Secretary of State) disperses women protestors with violence.

    Biden’s approval rating falls under 40%.

    President Biden is far more angry at the unvaccinated than the Taliban. Anger certainly predominated Thursday’s speech. Oh, no vaccination requirement for those 200,000 a month crossing the border.

    With the narrowest majority in the House and 50/50 in the Senate the Democrats plan the biggest tax increase and entitlement cram down ever, all in the next 17 days.

    Portland, Oregon bans doing business with Texas.

    Social mood is at best a windsock, not a crystal ball. But only eight months into Team Biden, mood is trending negative.

    Screen Shot 2021-09-10 at 2.47.50 PM

  • Professor Elam

    50 Million Toyota Corollas and Counting

    Weekend Sept  11, 2021

    Amy Plemmons tests the latest Corolla Hybrid.

    She notes Toyota introduced the Corolla in the  1960s and has sold over 50 M world wide.

    The Japanese have a word for evolution – Kaizen, meaning small changes.

    I recall seeing my first Corolla in about 1970. It had an AM FM radio, reclining seats, tinted glass, all standard, back when American makes charged extra for all those things. The Americans did everything but benchmark the obvious asking for import quotas from other countries and certainly not re engineering their products.   The Americans lave lost market share ever since.

    Notice hos American manufacturers have to change the name oftheir small cars with every model change, no one wants the last model.Toyota though has stuck with Corolla and Camry from the get go. Like Ford's Model T they fill a niche.

    This is what managerial accounting is all about. Getting it right the first time and staying on point building in quaality.

  • Professor Elam

    TXCPA Conversation

    Friday Sept 10 2021

    today I participated in a live FB stream with the CEO of TXCPA Jodi Ann Ray and Sr Lecturer Mary Beth Goodrich.

     

    Marty Beth and I were named TXCPA Out standding Educators statewide. Mary Beth teaches at UT Dallas

    https://www.facebook.com/TXCPAs/videos/555075322359013/

  • Professor Elam

    SA CPA Career Fair Day

    Thursday Sept 9 2021

    Friday Sept 24 2021

     

    5 30 – 7 00 PM on line

     

    Please share the attached flyer with accounting majors, potential accounting majors and CPA candidates who are considering their future career options.

     

    As discussed today, there will be seven presenting sponsors, in addition to the topic-specific speakers, who will provide information about their firms and how to connect with them regarding internships and entry-level jobs:

     

    ADKF

    Exencial Wealth Advisors

    Fisher Herbst & Kemble

    Ridout Barrett & Co

    Sol Schwartz & Associates

    Steven Bankler CPA

    theKFORDgroup

     

    Encourage your students/CPA candidates to sign up through you or contact us directly at 210-828-2722/toll free 888-828-8680 or amanda@txcpasa.cpa (new e-mail address) by Thursday, 9/23 at 5 p.m. to receive the Zoom link details. Name, university name and e-mail address should be included. If they want their resume included in the book to be provided to the sponsors, e-mail that in PDF to amanda@txcpasa.cpa by Friday, 9/17/21.

     

    Thank you for your assistance in getting the word out.

  • Professor Elam

    Interesting Insight into Health South Fraud

    Thursday Sept 9 2021

    I have had the best feedback on the Aaron Beam presentation of anything I have ever introduced to students.

    One student's Mother worked for Health South, here is his insight, very interesting.

     

    I'm always really interested when one of my business classes brings up Healthsouth because my mother is an Occupational Therapist who was working for them when all of this went down. She had gone up to the corporate headquarters in Birmingham and was amazed and disgusted with how the city put Richard Scrushy on a pedastal and how huge his ego was.  It was not a shock to most employees when the fraud came to light, it was just mostly embarrassing to say that you worked for them.  My mom and all of her co-workers also followed everything leading up to the trial. They had heard that Scrushy was actually going around to different inner city churches each weekend, trying to manipulate people that might end up in the jury pool into believing he was a great guy. She was always dumbfounded that a jury could believe that all these different CFO's over the years all had the same scheme when they didn't even work together, but Schrushy knew nothing. Right…..

    I was really impressed with Mr Bean and his sincerity. You were correct when you said that listening to him first hand really made this issue jump out of a textbook and apply it to a real person. I'm sure that he knew that the truth would come out one day.  I can't imagine the anxiety that that would cause. How can you ever really just enjoy your life after you've cheated? He didn't mention that one of the CFO's committed suicide around this time as well. 

  • Professor Elam

    NFL Players plead guilty to defrauding Health Care Fund

    Wed Sept 8, 2021

    NFL ringleaders sought players eligible for payments from a special fund.

    They then forged fake invoices for equipment and services that never took place.

    Gene Upshaw NFL Player Health Reimbursement Account Plan

    I thought those guys make pretty good money to start with? Screen Shot 2021-09-08 at 8.08.28 AM

    What Clinton Portis and other ex-NFL players allegedly did

    In the original indictment, the trio was part of a group of 12 players accused of submitting false claims for reimbursement for expensive medical equipment that was never purchased, such as hyperbaric oxygen chambers, ultrasound machines that are typically used on pregnant women, and electromagnetic therapy devices used on horses.

    The ringleaders would allegedly find ex-players eligible for the program and offer to submit claims, fabricating documents and prescriptions in exchange for kickbacks.

    Claims would allegedly be for about $40,000 to $50,000 and were submitted between June 2017 and Dec. 2018, eventually adding up to millions of dollars in fraud.

    In addition to the three players who pleaded guilty on Tuesday, 12 other players, including former Pro Bowl wide receiver Joe Horn, have been charged and pleaded guilty.

     

  • Professor Elam

    College of Business Library Newsletter

    Wednesday Sept 8 2021

    click here to access the Fall 2021 COB Library newsletter.

    Lots of interesting links and research guides.

  • Professor Elam

    Kraft Et tu Brute’?

    Tuesday Sept 7, 2021

    Coda to a massive scandal: Two Kraft executives charged in accounting scheme [CNN Business] The SEC announced the formal charges and the settlement on Friday after a long-running regulatory investigation that Kraft disclosed in 2019. The company will pay $62 million as part of the settlement. The agency alleges that from the last quarter of 2015 to the end of 2018, Kraft “engaged in various types of accounting misconduct” — including faking supplier contracts to get discounts that the company hadn’t earned — to ultimately make their financials look better to analysts and investors.