Value Investing Weekly-Rebirth

ValueInvesting Weekly returns from our sabbatical with a fresh approach. Instead of merely presenting topics that pertain to investing, and more specifically value investing, we are going to take this feature and expand to include current events and how they relate to the topic. You can consider this as a browsing the news meets valueinvesting weekly in the manor we will write and approach this feature. In the future you can expect nothing but the most in depth analysis of current business events and the impact they have on the investing world.

As we fine tune this feature please be patient as it may change from week to week in esthetic look and actually content. If you have any suggestions or concerns please email Jon@ModernGraham.com, and he will address your issues.

 

HP to pay to settle probe

Hewlett Packard is paying the price of having their executives spying on executives and attempting to create a dictatorship work environment within the company. This illustrates the need for companies to have sound corporate governance and make sure that each individual with power be held accountable for their actions and the proper steps be taken. Investors rely on the legitimacy and truthfulness of the management running THEIR company THEY own (emphasis added). On that topic it is also the investor’s responsibility to take action with their votes if they feel management is not acting in their best interests.

Wal-Mart drops Ad agency

The interesting point in this article is not the actual article, but rather the importance of public perception of a company. In Wal-Mart’s situation as a retail giant it is crucial that the public believes that they are not this “evil” corporation that is way too often associated with companies of Wal-Mart’s size. It is imperative that companies in this type of position allocate the proper amount of capital to preserve or create a positive image as consumers can easily voice their displeasure through their feet walking elsewhere to spend their money.

Taco Bell has a difficult task ahead to reinsure the public their product is safe and healthy. An investor need not worry though, because it has been proven that companies can easily fix this short term problem and it does not affect long term prospects for the company.

Analysis

All of these issues mentioned above relate to two key issues corporate governance and public perception. Although different, they share a common component in the overall integrity of a company. As an investor we cannot bury our heads in the sand regarding these “soft” issues because they adversely affect share price both short and long term. We need management in a position who uphold to a strong code of conduct and are able to become creative public relations managers when the company fails to meet these guidelines. Sufficient capital must be spent to maintain both the perception and truthfulness of executives within a corporation. 

 

 

 

 


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