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Top Articles - Sensible Stock Investing - Don't Entrust Your Money to Untrustworthy Management
It was recently reported that AES, a Virginia-based electric utility, plans to reschedule the release of its fourth-quarter and full-year results because of errors in its financial statements. AES had similar problems last year, when the
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
company admitted material weaknesses in its accounting systems, particularly in its foreign operations. The company expects, as before, to restate its financial results. It was also reported that the company revealed that it may have a
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
tock-option dating issue.
In rating a company’s quality—the very first step in deciding whether it is even a candidate for your investment dollars—management trustworthiness is a mandatory litmus test.
The Sensible Stock investor seeks
In rating a company’s quality—the very first step in deciding whether it is even a candidate for your investment dollars—management trustworthiness is a mandatory litmus test.
The Sensible Stock investor seeks
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
unquestionable integrity of management. Here are examples of situations that should paste a big red flag on any company:
• Companies being sued on antitrust grounds.
• Companies that produce unsafe or harmful products and attempt to de
• Companies being sued on antitrust grounds.
• Companies that produce unsafe or harmful products and attempt to de
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
y or evade responsibility.
• Companies that admit lying or misleading the investing public in any way.
• Companies whose reported financials are questioned, or which have a reputation for “aggressive accounting.”
AES falls into the la
• Companies that admit lying or misleading the investing public in any way.
• Companies whose reported financials are questioned, or which have a reputation for “aggressive accounting.”
AES falls into the la
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
st category. First, it can’t seem to get a handle on its own numbers. For two years in a row, it has had to delay or restate its financial results. In my book, that makes them “untrustworthy.” I don’t mean this in a personal way. They ma
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
all be good, honest guys there at AES. They may simply be incompetent. Their intent (whether to be honest or misleading) is not the issue. The real issue is, can you trust their numbers? Clearly you cannot. If I were evaluating this com
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
any for possible investment, I’d save myself some time and toss it out as soon as I ran across this information.
Note also that AES has a potential second problem: It may have a stock option back-dating issue. The admission of options-b
Note also that AES has a potential second problem: It may have a stock option back-dating issue. The admission of options-b
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
ckdating issues—which are sometimes innocent but are often outright fraud—has become almost epidemic over the last year or so. Because the practice was so widespread, perhaps it shouldn’t be considered a trustworthiness issue.
But then
But then
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
again, not every company that issues stock options backdated them. Backdating options, after all, moves money out of shareholders’ pockets and into the pockets of management or board members. It is lying to shareholders. If management li
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
s about that, what other subjects might they be misleading you on? New products? New markets? Operational improvements? How can you know?
With what kind of company would you rather place your bet? A company which effectively cheats its
With what kind of company would you rather place your bet? A company which effectively cheats its
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
wners out of some of the profits to which they are entitled, or one that keeps its owners’ interests foremost? The question answers itself.
Some indicia of untrustworthiness are easily found in public records. Has the company had a form
Some indicia of untrustworthiness are easily found in public records. Has the company had a form
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
l SEC investigation in the past year or two? Has it repeatedly taken “one-time” charges year in and year out? Has it recently restated earnings? Has its CEO or CFO resigned under questionable circumstances?
Depending on your point of vi
Depending on your point of vi
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
ew, an entire spectrum of factors can lead you to question a company’s integrity. For example, Microsoft was adjudged in court decisions to have used illegal tactics repeatedly and over a long period to preserve its monopoly in PC operat
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
ng systems. Years after that issue first came to light, the company is still fighting these charges in Europe. You may consider this proof of a lack of integrity and refuse to invest in Microsoft for this reason alone.
For another examp
For another examp
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
e, consider Daimler-Chrysler: At the time of the “merger” of Chrysler and Daimler-Benz, Jurgen Shrempp (CEO) said that there would be equality of the companies after the merger. Shrempp later retracted these statements, publicly acknowle
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
ged that he had misled, and appointed a German to head Chrysler. Many of Chrysler’s executives left the company as the truth of the situation emerged. So did a lot of investors: From early 1999 to early 2001, the stock dropped 50 percent
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
. Now, in 2007, Chrysler is no longer one of the "big three" automakers, and it is reportedly on the sales block. As Dr. Phil might ask, “So, how has that worked out for you?” Evidence of lack of integrity was there from practically the
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
eginning of the acquisition by Daimler-Benz.
Back to AES. Questions abound: Will AES ever be able to get a handle on its accounting? Can any of its reported numbers be relied upon? Has the company committed intentional fraud with its op
Back to AES. Questions abound: Will AES ever be able to get a handle on its accounting? Can any of its reported numbers be relied upon? Has the company committed intentional fraud with its op
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ions practices? Does anybody there know what they are doing? Does AES’ board have a clue?
With questions like these, why would anybody entrust their hard-earned money to buying AES stock? The Sensible Stock Investor certainly should not
With questions like these, why would anybody entrust their hard-earned money to buying AES stock? The Sensible Stock Investor certainly should not
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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