Blue Sun

Rock the Vote

The Washington Post ran a funny piece on the favorite songs, albums and musicians of the Democratic candidates. Not surprsingly, the Beatles dominated the selections, though there were a few shockers with my favorites being:

General Wesley Clark's favorite dance song: "Don't Stop Believing" by Journey
Dennis Kucinich's favorite concert: Liza Minelli (granted Liza is tied with the Rolling Stones in his mind, but come on, this guy is the punchline of the greater fool theory)
Rev. Al Sharpton's favorite artist is James Brown - that's not surprising, but the fact that he used to be a road manager for the Godfather of Soul is.

And Howard Dean found a way to one up everyone. While he didn't respond to the journalist's survey (the only current Deomcratic candidate who didn't by the way), he is on record in other interviews saying that "he's a fan of OutKast as well as hip-hop multiculturalist Wyclef Jean -- whom he discovered through his kids -- and he chose Jean's "Jaspora" as a favorite song in a September debate." (full disclosure - everything in quotes is from the article directly).

At least Dean is interesting. I hope he stays around past next week's primaries just for the entertainment value.

The price of embedded accounting firms

From Second Curve Capital's weblog, a quote from Lynn Turner, former Fed official and current accounting professor:

"On all the major debacles, including Tyco, Ahold, Enron, Rite Aid, Xerox, Cendant, HealthSouth, WorldCom, Microstrategy, W. R. Grace, Sunbeam, Lucent, Oxford Health and Adelphia, the auditor had a longtime relationship and should have had boat loads of knowledge." --Lynn Turner, former chief accountant at the S.E.C., providing the clinching argument for why companies should be required to switch auditors regularly. (bankstocks weblog)

I've heard public company executives complaining about Sarbanes-Oxley and how additional regulation is too onerous. Adding a mandated switching of accountants to the mix only increases their ire. Yet these same executives fail to acknowledge that as the stewards of the public's capital, they have a fiduciary responsibility to act in the best interest of their owners - specifically their shareholders. Part of acting as a fiduciary is clear and open communications with those you are representing. Changing accounts is an important aspect of this transparency.

Much as many in the financial community early on claimed that the late trading scandals in the mutual fund & brokerage communities were bad apples and not systemic, there subsequently have proven to be far too many examples of a larger scale problem. The close relationship between accountants and clients is no different. Public companies should be forced to change firms (not just relationship partners) to bring new eyes to a company's accounting practices. As we witnessed at Enron, and detailed in Peter Elkind and Bethany McLean's The Smartest Guys in the Room, long term relationships between audit firms and clients leads to clients hiring the auditor's employees, which results in mis-aligned interests. How can accountants be objective and candid when former friends, managers and co-workers are scrutinized? Regular changing auditors will remove the problem.

Executives should stop complaining. They control their own destiny. They have a choice... stay public and act in the interests of shareholders or take the company private and act in their own.

New music from Shane Nicholson - take a listen

Shane Nicholson's new CD, It's a Movie, was strongly reviewed this week by USA Today. The Aussie Nicholson's CD is the most recent release off of indie singer-song writer label Virt Records. Virt Records also has Vienna Teng on its roster. SHe received tremendous critical acclaim and was highly sought after by David Letterman (appeared on her show in January 2003).

Syndication

I'm back

After a break for New Years, a trip to Vail with 190 of my closest Whartonites and my first week of classes, I'm back. I'm hoping to write 2 to 3 times per week, depending upon my workload. For the first time at Wharton, I'm incredibly excited about my classes, which are:

- Securities Analysis
- Real Estate Investments
- Negotiations
- Management and Economics of Pharmaceuticals, Biotech and Medical Devices
- Advance Study Project on Value Investing

I have included links to either the course descriptions or professors associated with them

The Value Investor self-study seminar is particularly exciting. Seven of us meet to discuss different styles of value investing as well as legendary investors. We look at the components of analysis that have led these investors to invest in some companies, particularly Warren Buffett. We will take a look at 4 companies that Berkshire bought (that we could get public documents on before they were acquired) and attempt to deconstruct Buffett's thought process. Then we'll look at 4 current public companies and try to determine their value using many of Buffett's analytical criteria.

As the foundation, our reading list includes:
The Intelligent Investor by Benjamin Graham
Common Stocks, Uncommon Profits by Philip Fisher
Value Investing: From Graham to Buffett and Beyond by Bruce Greenwald
Financial Shenanigans by Howard Schilit

The genesis of the Value Investing self-study came from our trek to Omaha to meet with the Oracle of Omaha himself, Warren Buffett, in October. Here's a link to the article in the Wharton Journal.

I'll be adding my thoughts on my classes and interesting topics that arise on my blog intermittently.