...Job was to fix the SEC. She didn’t stop there. Vision SEC aims to act as an agency that was high functioning, agile and intelligent, and committed to investor protection and market integrity. Mission: Restoring SEC’s vigour and credibility within the financial regulatory Community. Value: vigor, credibility, high functioning, agile, intelligent, commitment, integrity. Goal: Financial Customer Internal process Learning and growth Mary set up three strategic themes/priorities to pursue • Operational levers, • People, • and organization levers that assisted in achieving those options. Three priorities a) Assessing what needed to be done within the organization (internal assessment) [ First get the right people and then lead the strategy ] 1. Schapiro recruited analysts and people who understood trading, market structure, corporate governance and a whole range of skill sets that would be important for the future. 2. She recruited people from Wall Street to restructure the SEC’s largest division – enforcement and examination - “to make this regulator more responsive, more agile and clever and capable of seeing around corner to figure out where the next problems were before they hit us in the face”. 3. Schapiro leveraged the SEC talent by bringing in new invigorating leadership. 4. Talented staffs on its books were sent to qualify as certified fraud examiners; a whole layer of management was removed and was...
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... Cochlear BY: James Greenhalgh RE A DIN G TIM E : GENERAL INFORMATION Latest Recommendation: Share Price: 12-month range: Hold $71.36 $51.83 - 72.81 Healthcare & Biotechnology Business Risk: Share Price Risk: Maximum Portfolio Weighting: Medium Medium 5% AT 24 OCT 12 2 mins HOLD PRICE AT REVIEW : $62.72 Yesterday’s 16% share price rise for Cochlear shows just how desperately investors love this stock. But the wild enthusiasm seems misplaced, even though the announcement contained several snippets of good news relating to the recall of the Nucleus 5. The first is that Cochlear believes it has identified the problem with the manufacturing process; variations in a process called ‘brazing’ allow tiny cracks to develop at a later stage. But identification is only the first step in returning the device to market: Cochlear must now thoroughly test its manufacturing processes, conduct clinical trials, then wait for approval from regulatory authorities. If all goes well, it could be a year before the Nucleus 5 goes back on sale in the crucial US market. Perhaps what investors latched on to was this sentence: ‘There were fewer reported failures in November 2011 than in October 2011’. Nevertheless, the total failure rate is now at 1.9%, up from around 1% in October. This represents close to 500 people who will need surgery to replace their implants. This recall remains potentially more serious than the market...
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...languishing SEC. She changed the way they were doing things at the SEC including creating new structures, procedures, and programs to better address the modern financial markets as an urgent need to restore the credibility and public confidence in the SEC. This analysis is based on Kotter’s (1995) eight-step process for leading successful change. a. Establishing a sense of urgency The chairwoman argues that urgency is critical. Schapiro developed a change program with three priorities comprising internal assessment, investor protection focus and mistakes acknowledgement. The mission was to turn the SEC to be a high functioning, agile and intelligent, and committed to investor protection and market integrity. b. Creating a guiding coalition In order to able to manage the change process, she brought in new leadership and new senior team. The new leadership team set about retraining, skilling up and motivating the SEC’s talent staff. In addition, the investor –focused agenda was putting in place. The board and senior management and then all levels of decision making were required to pay attention to risk at all level of an enterprise. The whistle blower program was set up to detect securities violations. A final goal was to admit the mistakes that the SEC made under its watch. This is the first step in communicating the change vision. c. Developing a vision and strategy A vision was created to help direct the change effort, that was, to...
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...interest rate the issuer promises to pay to the investor. For fixed-income investments, this rate is fixed at the time a bond is issued and doesn't change. Market interest rates: The prevailing interest rates in the bond markets on any particular day. These rates change based on the economy, policies and other factors. There is no single market interest rate. The rates will vary based on the time to maturity for a particular bond, the credit quality of the issuer and other factors. Market price: The current value of an existing bond if you wanted to sell. This is the price you'd see on your quarterly statements. Market prices can be above (or at a premium to) the par value, or below (at a discount to) the par value, depending on current market interest rates, the promised coupon rate and other conditions. Maturity: The date that a bond's par (face) value is repaid and interest payments stop. The longer the time to maturity, generally, the higher the interest rate will be—but the higher the risk of a bond's price falling, as well, if market interest rates increase. As time passes and the maturity date approaches, the impact of interest rates declines. The price of a bond, if trading at a discount or premium, will move back toward par the closer the maturity date. Par: Also known as "face value," par is the amount an investor originally paid for a bond (assuming it was bought new) that will be returned to the investor when the bond matures. The market price of a bond...
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...- “The central principle of investment is to go contrary to the general opinion on the grounds that if everyone agreed about its merit, the investment is inevitably too dear, and therefore unattractive.” – John Maynard Keynes Many money managers feel they must distinguish themselves as either “growth” or “value” investors. While an apparently benign distinction, this simple act can have unintended consequences. This article will address conventional definitions of growth and value and then look to the market oracles for a dose of worldly wisdom. Value investing: The strategy of selecting stocks that trade for less than their intrinsic values. Value investors actively seek stocks of companies that they believe the market has undervalued. Growth Investing: A strategy whereby an investor seeks out stocks with what they deem good growth potential. In most cases a growth stock is defined as a company whose earnings are expected to grow at an above-average rate compared to its industry or the overall market. (Definitions taken from Investopedia) The difference between the two approaches might best be illustrated by an example at the far end of the value and growth spectrums: Take two companies with differing future prospects: Company A and Company B. Company A: Analysts love this company, and rightly so: this company has emerged as a monopoly in a new industry. Profits grow at a rate of 40% a year. In industry parlance, company A is a ‘growth stock’ Company B:...
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...Inside the ‘Shark Tank’ Fight That Caused Three Investors to Storm Off the Set In the article, “Inside the ‘Shark Tank’ fight that caused three investors to storm off the set” it talks about the recent episode where an entrepreneur got the deal he wanted, but the investors on the other hand were left unhappy. Entrepreneur, Christopher Gray who created the scholarship database company called Scholly went onto Shark Tank to get $40,000 and let the investors get 15% of his company. Scholly is a smartphone app that “matches students with hundreds of higher education scholarships they can apply for” (Feloni). In the end, Gray received not only one, but two investors who invested in his company. The issue in this article was that all investors were interested; however Greiner quickly invested in Gray’s company within minutes (10 minutes real time) without needing any financial information. Greiner’s actions of investing in Gray’s company without needing financials left the other investors feeling like her actions were senseless and irresponsible. This article made me think, if I was an investor was it wise for Greiner to invest quickly in Gray’s company without knowing the financials or how the product they invested in works? Another issue that was brought into this article was the show was not meant to throw money away and be a charity tank. In the end, there was a debate on whether the investment was the result of pity or the business potential. Overall, I believe this article...
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...THE WARREN BUFFETT WAY Investment Strategies of the World’s Greatest Investor ROBERT G. HAGSTROM MAIN IDEA Warren Buffett is one of the most successful stock market investors of the past 30 years. His entire approach is to focus on the value of the business and its market price. Once Buffett finds a business he understands and feels comfortable with, he acts like a business owner rather than a stock market speculator. He studies everything possible about the business, becomes an expert in that field and works with the management rather than against them. In fact, often his first act on buying shares in any company is to grant the managers his proxy vote for his shares to assure them that he has no intention to try and move the company away from its core values. Buffett champions the value investment strategy, and puts no credence in day to day movements in share prices, the impact of the economic mood overall or any other external factors. He maintains a long-term perspective at all times, and never loses sight of the underlying value of a business. THE BUFFETT APPROACH TO INVESTMENT 1. Never follow the day to day fluctuations of the stock market. The market only exists to make it easier to buy and sell, not to set values. Keep an eye on the market only for someone who is willing to sell a stock at a not-to-be-missed price. 2. Don’t try and analyze or worry about the general economy. If you can’t predict what the stock market will do from day to day, how can you reliably predict...
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...no one has an interest in that patent. The ever changing cash flows prove to be difficult for decision making, especially when it comes to whether the company should give back to its investors or not. Haveloche is constantly faced with the predicament of deciding what dividend policy is best for the organization and the investors. The company’s CEO listed the stock prices and dividends for us to take a look at, so let us do just that. Below are the two scatter plots created from the information given in the case. The first scatter plot charts the dividend and the stock price. As you can see from the scatter plot, there is no obvious correlation between the two. The dividend does not necessarily move in the same direction or the opposite direction of the stock price. The second scatter plot charts the change in the stock price with the dividend. As you can also see with this scatter plot, there is no real correlation between these two. There are 3 theories of investor preference for dividend versus capital gains: (1) Dividend Irrelevance Theory or Modigliani Miller (2) “Bird-in-the-hand” Theory (3) Tax Preference Theory. According to Modigliani Miller (MM), the dividend policy has not effect on the stock price of the firm or the cost of capital. This theory states that investors reinvest the dividends back into the firm and the firm’s value is only based on the income produced from its assets, and not the dividends and retained earnings. According to the...
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... To understand relationship between risk and returns of the asset, Security Market Line (SML) can be used. Mr. Sharpe has created this CAPM model and to make it easily operational, he has made some assumptions. These assumptions may seem unrealistic, but to explain any economic or finance theory, they are essential. Market efficiency Sharpe has assumed that market is efficient, which means everyone reads either Economic Times or Business Standard or Mint and has all information about market and her/his shares. Everyone holds small amount of wealth and s/he cannot influence market. One holds handful of water and the market is an ocean. Risk aversion and mean-variance optimization Investors want to take as less risk as possible. It means they want to avert risk. They are so intelligent that they also evaluate the risk and return the asset. To evaluate return, they use expected rate of return and for calculation of risk, they use either variance or standard deviation. They prefer highest return for a given level of risk. This implies that...
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...Is Marketing Totally Ethical? Kotler and Armstrong, posit that marketing is about managing profitable customer relationships by creating value for the customer in order to get value in return. It begins with identifying what the customer needs, crafting customer driven strategies, fashioning out marketing programs, building customer relationships and capturing value for the firm. In the process of carrying out various marketing activities, through different media, the question of marketing ethics comes to the fore. Marketing ethics according to Philip Kotler is “the area of applied ethics which deals with the moral principles behind the operation and regulation of marketing”. Applied ethics, in the words of Brenda Almond, co-founder of the Society for Applied Philosophy, "the philosophical examination, from a moral standpoint, of particular issues in private and public life that are matters of moral judgment". It is thus a term used to describe attempts to use philosophical methods to identify the morally correct course of action in various fields of human life. An ethical practice would bring about the greatest good and value for all those involved. Marketing is hinged on the need to transmit the value of a product or service to end users to influence buying behavior and unethical practices may arise from the hassle to meet performance targets. Marketing cannot be said to be totally ethical since it involves reaching out to a large mass of people with different backgrounds...
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...The public figure I chose that acted unwisely is Bernie Madoff, the former non-executive chairman of the NASDAQ stock market. He is known as the operator of the largest financial fraud in U.S. history (Creswell & Landon, 2009). He schemed thousands of investors out of billions of dollars that could have begun as early as the 1970s (Kolker, 2008). This unwise scheme that he led for so many years was a lack of emotional intelligence. He showed of lack of emotional intelligence because he did not have any emotions for the people and organizations he was ruining. Despite his wrong doing, he did not lack successful intelligence because not only was he successful with operating this for so many years, he was also intelligent in keeping it hidden. I would say that he thought analytically, creatively, and practically to pull this off. Being the twisted person he is, I feel that he was only lacking in accurate perspective in the aspects of wisdom; he knew what he was doing. Although he could reach between the lines, nothing he said was true (Bolt, 2004). Even though he was unwise of what he did, he was intelligent and wise enough to get away with it for so many years. He obviously learned from past mistakes to be so successful with the scheme. He had a logical mindset to get away with taking people’s money while dealing with people daily; he could tell them what they wanted to hear (Bolt, 2004). He thought before he spoke because he did not want to get caught, he had everything...
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...capitals are both very important to the development and growth of the company’s daily operations. Investors believe that it is very important that both sources of capital are separated, for many different reasons. One reason for the separation is that both capitals are different funding foundations and that paid in capital indicates the assets will be used in the development of earned capital. Likewise, earned capital signifies that assets accumulated from the moneymaking process in the company. As a result, if the two sources are not separated this will create some misunderstanding. That is because paid in capital increase and enhances the earned capital. Merging the two sources of capital will cause a misunderstanding and falsification of the earning the firm has generated. Collaborating the two will also lead to complication in calculations with concern to profit margins. The two sources of capital must be divided this is because the shareholders and investors information must be unmistakably distinguished from one another. Both forms of capitals need to be distinguished for simple and assured form of security to companies offering capital in surplus. This also offers a form of safeguard to both creditors and investors if liquidation or bankruptcy were to occur. The purpose behind it is that the both sources of capital illustrate the strength of the company financially. Investors will need to be kept aware of the use of earnings and calculations. If both sources of capital...
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...ACC/497 January 30, 2013 Decisions are made daily by company management, lenders, and shareholders. To make informed, intelligent business decisions, there are several strategies that are used by each of the fore mentioned entities. When deciding if investing is the right choice, if a company will be able to repay a loan, or what needs to happen to make a company more efficient, the best way to get an inside look at the company and the information needed, would be to look at the financial statements. By looking at the income statement, balance sheet, and the statement of cash flow, the financial health of the company can be discovered. A shareholder or potential investor will certainly want to see if the company that they are investing in is going to give them a return on their investment. To get a clear picture of whether or not this concept is a possibility, the information would best be gathered from the income statement. Investopedia defines an income statement as “a financial statement that measures a company’s financial performance over a specific accounting period.” (Investopedia, 2013) One is able to look at the income statement to assess the financial summary of how revenue and expenses through operating and non-operating activities are incurred. It will show the reader any net profit or loss that has incurred over a year or fiscal quarter. An investor would look at the income statement because it provides information on revenue and expenses that correlate to regular...
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...• Regulators and traders were investing in schemes they did not understand and whose behaviour they could not predict • The SEC was exposed as ill-equipped to deal with the chaos after the GFC • US govt handed the financial sector a multi-billion dollar bailout • In 2010, it SEC reached it largest ever settlement when Goldman Sachs was fined $550 million for committing fraud by misleading investors about mortgage securities • Lack of attention to detail to every level of an enterprise Mary Schapiro • Career regulator • She was appointed by the president to assess what went wrong and to ensure it did not happen again • 29th chairman of the SEC and this first female chair • Restoring the agency’s vigour and credibility within the financial regulatory community • A high functioning, agile and intelligent agency, that is committed to investor protection and market integrity is necessary to ensure the success of the economy • Time pressed • Main priorities 1. Assessing what needs to be done within the organisation 2. Shifting the agency’s focus back to protecting the investor 3. Acknowledging its mistakes • Resigned from the SEC to join Promontory financial as a consultant • On the board of GE • Be a good colleague, be the go to person and somebody who the colleagues can rely on • Be an expert, and be the go to person who knows everything there is to know about a subject, build credibility • Work-life balance • Engage in public service and bring all the expertise...
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...Intelligent Cost Reduction Developing & executing a program to reduce cost & create a sustainable operating platform July 2008 Contents Section 1 2 3 4 5 6 Point of view Anatomy of a successful total cost management program Beginning with the business & front office Opportunities in the support units Some lessons learned PwC qualifications to help Page 3 7 11 16 19 21 Point of view Point of view • Cost management is a key issue today and for the foreseeable future – The market is experiencing a severe liquidity crunch and the explosion of a global asset bubble well beyond sub-prime. At the root of this crisis is not only asset values, but the amount of capital in the financial system today versus the size and liquidity of the balance sheets (and off-balance sheet commitments) of financial institutions. This situation is not likely to reverse itself for a number of years. In the environment of de-leveraging and scarcity of capital, we believe fundamental re-thinking regarding business strategies, operating models and cost structures will be necessary. • A pre-securitization baseline may be the appropriate mindset – If one assumes that the securitization markets have significantly contracted in a permanent fashion, then the appropriate way to think about the business may be in a pre-securitization baseline, adjusted for key acquisitions/divestitures, etc. This means that the proper mindset to consider in the business strategy and budgeting area may...
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