The D.I. Bulletin

DI Research Team's picture

Disclosure Insight Suspends Operations Indefinitely

On 01-Feb-2012, our strategic partner ITG (NYSE - ITG) announced it impaired $4.3 million of an investment it made in Disclosure Insight in April 2010. ITG did not hit the sales targets required under our mutually agreed-upon business plan needed to keep Disclosure Insight afloat.  Unfortunately, this means Disclosure Insight must now suspend our operations indefinitely.

We obviously regret deeply having to take this action, however, absent either the funds or sales force needed to continue on our own we had no choice.

In parting, please know we are eternally grateful to all the friends and supporters of “DI” through the years.  It's truly been both a pleasure and a privilege to have worked with you all.

We look forward to what comes next …

John P. Gavin, CFA
Founder and CEO

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On 25-Jan-12, Catalyst Health Solutions (NASDAQ: CHSI) announced the resignation of General Counsel Bruce Metge, effective 1-Mar-12. He will be replaced by Benjamin Preston on that date. Preston will be the third individual to fulfill this role since 2008. Elsewhere in the executive suite, CHSI has seen two COOs and five CFOs (one of whom has served twice) in the past five years. Additionally, in Dec-11, Chairman Edward Civera resigned and was replaced as such by CEO David Blair, son of former Chairman Thomas Blair.

Below is a detailed breakdown of the above activity in the executive suite:

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John P Gavin CFA's picture

FCPA Probes - Why Investors Should Care

This video takes you through why investors should care a lot more about FCPA probes than many do now.  

Public company disclosures of investigations pertaining to potential violations of the US Foreign Corrupt Practices Act (FCPA) are widely perceived as without consequence, and therefore typically ignored by many investors.   That thinking is misguided for the following reasons:

  1. A disclosed FCPA probe represents a judgment on the part of management that the company has a risk that is material to the investment decision making process. 
  2. It can indicate accounting fraud.
  3. It can hurt operations.

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DI Research Team's picture

Today's DI Reports

Here are the ratings for the 14 DI Reports that we published today.

Capella Education Co. (CPLA- $42.84 Mkt. Cap.- $619 M)   High Risk.

CSG Systems International Inc. (CSGS- $16.20 Mkt. Cap.- $549 M)   Medium Risk - Negative Bias.

Exxon Mobil Corp. (XOM- $86.77 Mkt. Cap.- $415910 M)   Medium Risk - Negative Bias

Genco Shipping & Trading Limited (GNK- $7.26 Mkt. Cap.- $261 M)   Medium Risk - Positive Bias.  

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In conjunction with its earnings release filed this morning, Janus Capital Group (NYSE: JNS) disclosed in an 8-K that Steven Scheid will retire as Chairman at the end of his term in Apr-12. This will be the company’s sixth director departure since 2007.

Scheid (age 58) has served as Chairman since Jan-04 and as a director since Dec-02. He also previously served as CEO from Apr-04 to Jan-06. In addition to being the sixth director to depart since 2007, Scheid will be the fourth person under the age of 60 to exit the board in that time. Glen Schafer (age 62) has been appointed to succeed Scheid as Chairman. He has been a director since Dec-07 as well as Chairman of the audit committee since May-08.

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Darin Norman's picture

Briggs & Stratton Announces Upcoming Restructuring and Impairment Charges

Briggs & Stratton (NYSE: BGG) announced that it plans to record up to $50 million of restructuring charges during fiscal 2012 in connection with 2 facilities consolidations and a capacity reduction at a facility in Missouri. The restructuring charges are expected to include at least $35 million of asset impairment charges. To give some perspective, BGG recorded asset impairment charges in FY07 and FY09 totaling $48 million.

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DI Research Team's picture

Companies With Risk of Undisclosed SEC Probes

The following is excerpted from a research report we originally published for subscribers on 12-Jan-12. It is based on data we routinely acquire from the United States Securities and Exchange Commission under the Freedom of Information Act. This particular report warns of the risk of undisclosed SEC investigative activity in the companies noted below. The full report of 12-Jan-12 is attached.

Undisclosed SEC Investigative Activity
 
Jefferies Group Inc. (JEF- $14.62 Mkt. Cap.- $2.9 B) New SEC Data Point Re-affirms Risk of Involvement in an Undisclosed SEC Investigation. In a letter dated 28-Sep-11, the SEC confirmed that this company was somehow involved in an active and ongoing investigation that appeared undisclosed at the time. In a letter dated 11-Jan-12, we received new information from the SEC suggesting, again, this company was involved in unspecified SEC investigative activity. We continue to find no disclosure of the same as of this date.
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DI Research Team's picture

Today's DI Reports

Here are the ratings for the 13 DI Reports that we published today.

Advance Auto Parts Inc. (AAP- $75.98 Mkt. Cap.- $5500 M)   Low Risk. 
 
CME Group Inc. (CME- $242.11 Mkt. Cap.- $16070 M)   Medium Risk - Negative Bias. 
 
Constant Contact, Inc. (CTCT- $26.37 Mkt. Cap.- $784 M)   Medium Risk - Positive Bias. 
 
Eagle Materials Inc. (EXP- $29.83 Mkt. Cap.- $1340 M)   Low Risk. 
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Josh Boomgaarden's picture

Is Roche Overpaying for Illumina?

Roche (RHHBY.PK) announced this morning that it has made a proposal to acquire Illumina (NASDAQ: ILMN), a provider of integrated systems for DNA sequencing, for approximately $5.7 billion. As part of the deal, Roche would acquire ILMN for $44.50 per share in cash, a 64% premium over the closing price on 21-Dec-11 (the day rumors about a deal began to fly). The hefty premium brings about a natural question: Is Roche paying too much?

With ILMN trading between $50 and $55 per share after the announcement, the market thinks Roche or another suitor is willing to pay more. That may be the case. However, back-of-the-envelope analysis says $44.50 a share could already be rich.

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On 23-Jan-12, Schlumberger Limited (NYSE: SLB) reported that Philippe Camus (director since 2007) decided not to stand for re-election at the 2012 annual meeting scheduled to be held this coming April. Once consummated, this departure, along with the previously announced departure of Chairman Andrew Gould at the annual meeting, will bring the total number of director departures to 9 since 2007.

While the departures of Camus and Gould came with ample notification before the fact, the trend over the past five years shouldn’t be ignored. With the exception of 2011, the company has witnessed at least one director departure every year since 2007. So far, there are already 2 planned for 2012. It should also be noted that 3 of the 9 departures were individuals under the age of 60. Camus and Gould will depart from the board at the ages of 63 and 65, respectively, years below the company’s mandatory retirement age.

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