Professor Elam

Accounting & Investing Info for San Antonio A & M

recent posts

about

  • Professor Elam

    SHLD Spins off Properties

    Monday April 7 2014

    Sears Holdings spun off Lands End this past Friday. We are studying the equity section of the balance sheet. A property dividend may be issued by a company. That is what SHLD is doing by creating separate companies. 

    But as you can see, some are warning the good stuff is being spun off leaving the bond holders of SHLD with fewer and feweer assets. Here is the entire history of SHLD.

    Screenshot 2014-04-07 06.55.23

    I remeber discussing this when I first started teaching here. BAck in 2004 Lampert was hailed as the next Warren Buffet. He bought K Mart in Bankruptcy Court for more than the actual land under the buildings was worth. He then managed to marry that with Sears. But while the stock averages have rallied back since 2009, SHLD is trading near the 2008 lows.

    What do  you think?

  • Professor Elam

    FB Helps Good Time Charlie’s Over the Top

    Weekend April  6 2014

    The paper's results are here; the SA Express News  credited an excellent Facebook campaign. They are Screenshot 2014-04-06 08.11.19right, take a look at how to do a Facebook campaign. Just put Good Time Charlie's iknot the search box on FB to see how they did it. 

    Clearly this is not a nutrition themed, get skinny campaign…

     

    I observed a report on the TAMUSA FB page.It has 5200 likes, A  & M Commerce with more than twoice the enrollment has over 9,000. Is that really  a good result for the time and energy spent on the FB Page ???????

     

    Good Time Charlie's has 1,868. 

     

  • Professor Elam

    Box Gate Has Arrived, Only in Texas

    Weekend April  5 2014

     

    Two ladies in Lubboock have hit on a clever idea for the ultimate insomewhat portable tail gating. Screenshot 2014-04-05 06.14.09 

    Their idea uses a self contatined highly modified 8 x 20 Shipping Container. Frankly this is the sort of over the top idea I usually associate with an oil boomg. 

    Speaking as an ex oilfield hand,one would need to mount this on a skid with the requisite pipe and ends on one end so it could be pulled up onto a trailer of an 18 wheeler. 

    That frankly seems impractical. The better idea woud be a self contained  8 x 20 trailer that could be pulled behind a pickup or SUV with a frame. Or they could furnish an undercarriage of two axles and a frame to pull this but I suspect this is a rather heavy structure. A modified travel trailer with aluminum sides and again an undercarriage with an axle and tires would be better. 

    Screenshot 2014-04-05 06.19.19Here is a view of the unit presumably ready to be moved. But honestly unless you have a Peterbilt and float at your house I am baffled on how this is transported. 

    The video they furnish desperately calls out for a decent audio track the microphone should have been on the person speaking or better yet added later in post processing. 

    But give the gals credit for a unique idea. 

     

  • Professor Elam

    Navigating the Google Split

    Thursday April 3 2014

    Google split this week.  We are studying the equity side of the blaance sheet in intermediate accounting. Stock splits and stock dividends are part of that discussion. Please read this article to understand how the original owners of GOOG are increasing their hold over the company. They are receiving Class B shares with significantly more voting right. Other existing shareholders get Class C Shares, worth half their exisitng shares but sorry charlie, no voting rights. 

    An alert student in class noted that more companies are starting to follow the Buffet BRK model of not splitting shares. GOOG, AMZN, TSLA are all following this model. 

  • Professor Elam

    The Social Mood of Birds – Murmation

    Thursday April 3, 2014

    I often discuss the reality and impact of social mood. Social mood causes stock and bond prices to vary literaly from minute to minute and certainly from month to month. The animal kingdom provides examples of this via schools of fish or flocks of birds.

    Here is a video of hundreds of starlings flying in a defined formation. Now, does one bird make the decision of where to fly, land, turn, or is this a collective of all the birds?  Do a few birds in front make the decision?  One can clearly see the flock changing direction, but how does that come about?

    I have demonstrated in class with various stocks that mood will be positive, as in buying RAX right up to $80, and then the mood changes dramatically and everyone begins selling. 

    The answers to such questions will help analyze everything from political races to popular music and fashion trends. 

     

  • Professor Elam

    GM’s Pinto – The Cobalt

    Wednesday April 2 2014

    GM had lots of problems with the first 2005 Cobalt.

    GM's new CEO notes that GM was a climate of cost control at all costs, now a climate of consumer focus.

    This story is a lot like the Ford Pinto that caught on fire. Ford concluded it was cheaper to pay death claims than fix the mis placed fuel tank. Here GM concludes the same about a 90 cent part for an ignition switch. Worse, when GM did get a replacement part it used the same part number. Dealers could not tell the difference.

    This is a good subject for an ethics discussion in our classes. Why could GM not distinguish between consumer safety and cost?  What did that say about teh tone at the top? NOw the new female CEO has to make excuses or stew silently in front of a Congressional Committee eager of course for a photo op or sound bite at her expense.

  • Professor Elam

    Attention Retail Shoppers, Stores Closing

    Tuesday April 1 2014

    Alert Accountants pay attention to trends. Here is a list of the nine chains closing the most stores. Needless to say, some of the names are quite familiar for their recent retail woes like JCP and Radio Shack.

    The shrinkage that Howard Davidowitz predicted via the expanded internet shopping continues.

  • Professor Elam

    CAT Skirts $2.4 B in US Taxes Moving ‘Business’ to Switzerland

    Tuesday April 1 2014

    CAT negotiated a 4% tax deal with Switzerland.  Who would not do that rather than face the highest corporate taxes in the world. As CAT Finance Chief points out, CAT is already paying 29% of its profit in tax.

    Yet Carl Levin complains CAT is not paying its fair share.

    Congress sounds more adn more like Edward G Robinson in Key Largo, Asked what the gangster wants, he hesitates and Humphrey Bogart's character supplies the answer

    More, that's what Rocco wants, more, whatever it is it's never enough!

    Yeah replies Rocco, that's what what I want,

    MORE!

    Do you thnk CAT is paying its fair share, after all, what does Congress do for CAT?

  • Professor Elam

    FBI Probing High Speed Trading

    Tuesday April 1 2014

    Yesterday we linked to the interview with Michael Lewis on Sixty Minutes about High Speed Trading. 

    This morning I spotted this article in the WSJ. The FBI is probing such trading.

    Notice that this news i surfacing as the markets make new highs and small investors are finally scrambling to get in. It is not unusual for bad news to emerge at market highs. 

  • Professor Elam

    Zuckerberg Earns A Buck – In Ordinary Income

    Tuesday April  1 2014

    Mark ZUckerberg earned $1 in salary last year. But he cashed in options worth $3.3 Billion, that's Billion not Million.

    Today 's CEOs want call options. Attempting to boost the stock price by inflating or manging earnings has been the root of all evil at firms like Enron and Worldcom. I certainly don' t think that is the case at FB which shows earnings of 61 cents. Oh FB has dropped i price as well. 

    WE study options in Chaper 19 in ACCT 3312. I suggest you print out the CME handbook on futures and options I listed and begin reading!

    Recall that Mark turned down a billion that would be one billion offer for FB in the beginning. Guess he knew what he was doing.