Posts Tagged ‘lawsuits’

DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

Cup of espresso and cookie

By Scott Brown at Sabrient, and Ilene at Phil’s Stock World

Your sister sees the future
Like your momma and yourself
You’ve never learned to read or write
There’s no books upon your shelf

And your pleasure knows no limits
Your voice is like a meadowlark
But your heart is like an ocean
Mysterious and dark

One more cup of coffee for the road
One more cup of coffee ‘fore I go
To the valley below – Bob Dylan

Green Mountain Coffee Roasters (GMCR) doesn’t at first glance seem like the type of company that would need to be “mysterious and dark” but when “pleasure knows no limits” it can down into a metaphorical valley.  How does GMCR, engaged in the specialty coffee and coffee maker businesses, churning out quarterly profits that meet analyst expectations while growing at 61% per year over the past five years, and expected to grow another 35% over the next five years, end up at #18 on the Sabrient VCU short ranking? 

The fact that Michelle Stacy, President of Keurig (patented single cup brewing technology for GMCR), exercised 30,000 options at $6.20 on August 13, 2010 and  simultaneously sold the shares on the open market at $30.95 for gross proceeds of $928,500, again exercised 5,000 options at $6.20 on September 13, 2010 and simultaneously sold the shares on the open market at $35.40 for gross proceeds of $177,000 and a week later exercised another 5,000 shares from $6.20-$9.14 and simultaneously sold the shares on the open market at $37 for gross proceeds of $185,000 alone isn’t enough to raise any eyebrows or red flags.

There are many reasons that insiders may sell shares which have nothing to do with their perception of the company’s prospects or valuation.   However, when a week after the last insider sale the company discloses that the SEC is inquiring into the company’s methods for accounting for revenues, it starts to look a bit more dark and mysterious.   It is worth noting that Keurig accounted for over half of GMCR revenue last year, so when the President of Keurig is selling, it is worth a further look.  When the SEC discloses an inquiry into the companies accounting it is…
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DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

Reminder: Sabrient is available to chat with Members, comments are found below each post.

DARK HORSE HEDGE – One More Cup of Coffee Before You Go, GMCR

 

By Scott Brown at Sabrient, and Ilene at Phil’s Stock World

Your sister sees the future
Like your momma and yourself
You’ve never learned to read or write
There’s no books upon your shelf

And your pleasure knows no limits
Your voice is like a meadowlark
But your heart is like an ocean
Mysterious and dark

One more cup of coffee for the road
One more cup of coffee ‘fore I go
To the valley below – Bob Dylan

Green Mountain Coffee Roasters (GMCR) doesn’t at first glance seem like the type of company that would need to be “mysterious and dark” but when “pleasure knows no limits” it can down into a metaphorical valley.  How does GMCR, engaged in the specialty coffee and coffee maker businesses, churning out quarterly profits that meet analyst expectations while growing at 61% per year over the past five years, and expected to grow another 35% over the next five years, end up at #18 on the Sabrient VCU short ranking? 

The fact that Michelle Stacy, President of Keurig (patented single cup brewing technology for GMCR), exercised 30,000 options at $6.20 on August 13, 2010 and  simultaneously sold the shares on the open market at $30.95 for gross proceeds of $928,500, again exercised 5,000 options at $6.20 on September 13, 2010 and simultaneously sold the shares on the open market at $35.40 for gross proceeds of $177,000 and a week later exercised another 5,000 shares from $6.20-$9.14 and simultaneously sold the shares on the open market at $37 for gross proceeds of $185,000 alone isn’t enough to raise any eyebrows or red flags.

There are many reasons that insiders may sell shares which have nothing to do with their perception of the company's prospects or valuation.   However, when a week after the last insider sale the company discloses that the SEC is inquiring into the company's methods for accounting for revenues, it starts to look a bit more dark and mysterious.   It is worth…
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FDIC Authorizes $1 Billion Lawsuits Against Failed-Bank Executives; Token Search for Low-Profile Scapegoats

FDIC Authorizes $1 Billion Lawsuits Against Failed-Bank Executives; Token Search for Low-Profile Scapegoats

Courtesy of Mish 

The FDIC has only brought one case to date against executives of failed banks. Supposedly more charges are coming.

Bloomberg reports FDIC May Seek $1 Billion From Failed-Bank Executives

The Federal Deposit Insurance Corp. has authorized lawsuits against more than 50 officers and directors of failed banks as the agency aims to recoup more than $1 billion in losses stemming from the credit crisis.

The lawsuits were authorized during closed sessions of the FDIC board and haven’t been made public. The agency, which has shuttered 294 lenders since the start of 2008, has held off court action while conducting settlement talks with executives whose actions may have led to bank collapses, Richard Osterman, the FDIC’s acting general counsel, said in an interview.

“We’re ready to go,” Osterman said. “We could walk into court tomorrow and file the lawsuits.”

The FDIC, which reviews losses for every bank failure, has brought only one case against officers or directors tied to recent collapses — a suit filed in July seeking $300 million in damages from four executives of IndyMac Bancorp Inc.

The FDIC “brings suits only where they are believed to be sound on the merits and likely to be cost-effective,” according to an agency policy statement that dates from the savings-and- loan crisis of the 1980s. That requires considerations of whether an individual, if sued, has the means to pay or an insurance policy to cover all or part of the claim.

“It doesn’t make sense to file a lawsuit if at the end of the day you have a low chance of recovery,” Osterman said.

“It’s in both our interest and theirs to try and settle this matter before it gets into the court and we get into expensive litigation,” he said.

Political Stunt to Placate the Public

I see this as little more than a political stunt to placate the public. These cases are unlikely to go to trial, on purpose, and not for the reason the FDIC says.

The FDIC does not want to rattle the banking system, so they won’t. Instead they will settle most if not all of these cases for peanuts.

To make it look legit, the FDIC might pursue a couple of scapegoat cases, IndyMac being one of them, but don’t expect anything more.

Criminal
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Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance

Interesting to note that these actions are not being brought because Amedisys may have gamed the Medicare System but rather on the basis that if it did in fact game it, AMED had an ethical obligation to disclose its tactics. - Ilene 

Class Action Complaint against Amedisys uses Sarbanes-Oxley Act Corporate Governance Provisions to Battle Alleged Corporate Malfeasance

Courtesy of Sam Antar, White Collar Fraud 

Last week, Pomerantz Haudek Grossman & Gross LLP filed a class action lawsuit against Amedisys (NASDAQ: AMED) charging the company, its CEO William F. Borne and its CFO Dale E. Redman with securities fraud.  In the next few days, Bernstein Liebhard LLP and Finkelstein Thompson LLP filed similar class action lawsuits against the company. The lawsuits allege that Amedisys abused Medicare’s reimbursement system for at-home therapy care based on a compelling analysis of company revenues in an April 27 Wall Street Journal article.

In addition, the lawsuits innovatively utilize a provision under Section 406 of the Sarbanes-Oxley Act 2002 which provides a back-door way for investors to force ethical corporate governance and sue public companies for malfeasance. That provision requires Senior Financial Officers, such as the CEO and CFO of public companies, to abide by a strict code of ethics which broadly defines corporate malfeasance and effectively makes it easier for defrauded investors to prove misconduct by certain senior executives. Suing public companies for code of ethic violations can be a potent tool to insure good corporate governance and conduct.

Allegations that Amedisys intentionally increased patient visits to trigger higher Medicare reimbursements

According to the Pomerantz press release:

Specifically, the Complaint alleges that defendants made false and/or misleading statements and/or failed to disclose: (1) that the Company’s reported sales and earnings growth were materially impacted by a scheme whereby the Company intentionally increased the number of in-home therapy visits to patients for the purpose of triggering higher reimbursement rates under the Medicare home health prospective payment system, as those excess visits were not always medically necessary; (2) that the Company’s reported sales and earnings were inflated by said scheme and subject to recoupment by Medicare; (3) that the Company was in material violation of its Code of Ethical Business Conduct and compliance due to the scheme to inflate Medicare revenues; and (4) based on the foregoing, defendants lacked a basis for their positive


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Goldman Email Describes ‘Frankenstein’ Derivatives; Tourre Brags about Selling Abacus to “widows and orphans”; SEC Confident; German Bank Drops Goldman

Goldman Email Describes ‘Frankenstein’ Derivatives; Tourre Brags about Selling Abacus to "widows and orphans"; SEC Confident; German Bank Drops Goldman

Boris Karloff (1887-1969)

Courtesy of Mish 

Goldman Sachs claims it it dis not mislead clients. Its defense will not be very convincing in the face of revealing emails with "fabulous Fab" bragging about dumping Abacus bonds on widows and orphans.

Please consider Goldman’s Tourre E-Mail Describes ‘Frankenstein’ Derivatives

Fabrice Tourre, a Goldman Sachs Group Inc. executive director facing a fraud lawsuit in the sale of a mortgage-linked investment, said an index that facilitated derivatives trading in the market was “like Frankenstein.”

The so-called ABX index is “the type of thing which you invent telling yourself: ‘Well, what if we created a ‘thing,’ which has no purpose, which is absolutely conceptual and highly theoretical and which nobody knows how to price?’” Tourre said in a Jan. 29, 2007, e-mail released yesterday by Goldman Sachs. Watching the index fall is “a little like Frankenstein turning against his own inventor.”

In a March 7, 2007, e-mail Tourre describes the U.S. subprime mortgage market as “not too brilliant” and says that “according to Sparks,” an apparent reference to Daniel Sparks who ran Goldman Sachs’s mortgage business at the time, “that business is totally dead, and the poor little subprime borrowers will not last too long!!!”

A few months later, a June 13, 2007, e-mail shows Tourre claiming, “I’ve managed to sell a few Abacus bonds to widows and orphans that I ran into at the airport, apparently these Belgians adore synthetic ABS CDO2,” using short-hand for asset- backed collateralized debt obligations squared, or CDOs made up of tranches of CDOs containing asset-backed securities.

Goldman Sachs Readies Forceful Defense

The Washington Post is reporting Goldman Sachs readies forceful response against claims it misled clients

Goldman Sachs is preparing its most detailed defense yet to allegations that it misled clients in its mortgage securities business, arguing that the firm was unsure whether housing prices would rise or fall and did not take any action at odds with the interests of its clients.

Goldman prepared the 11-page document to serve as the basis for testimony that chief executive Lloyd Blankfein is scheduled to deliver Tuesday before the Senate Permanent Subcommittee on Investigations.

The Goldman paper describes debates among top executives in 2006 and 2007 over whether the firm should make investment decisions


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Democrats Claim Congress Has Authority to Make Everyone Buy Snuggies and Jupiter Jacks

Democrats Claim Congress Has Authority to Make Everyone Buy Snuggies and Jupiter Jacks

By Op-Toons Review 

Optoons Review

Washington, D.C.--After Congress, for the first time in U.S. history, passed a law that requires everyone to purchase a particular product — in this case health insurance — over a dozen states have filed lawsuits arguing the legislation violates the Commerce Clause of the Constitution which grants Congress only the limited power to regulate activities that effect interstate transactions. 

 

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The Rush for Money from Somewhere Other Than Work

The Rush for Money from Somewhere Other Than Work

money sourcesCourtesy of Charles Hugh Smith Of Two Minds

As jobs dry up, people are rushing to find some other source of income.

Both statistically and anecdotally, a rush to tap non-wage sources of income is underway. While shopping in an old-line hardware store slated for closure, the clerk assisting us noted as an aside, "I’m 62, so I can retire." He is not alone, as correspondent Craig M. sent in this story describing a leap in Social Security applications: Social Security Applications Almost Double Because of Recession

Applications for Social Security benefits rose almost 50 percent more than expected this year because of the recession, according to the federal retirement program.

“We are seeing a significant increase in both retirement and disability applications as a result of the recession,” said Mark Lassiter, a Social Security spokesman.

The 150,000 extra retirees may add to the financial pressure on the entitlement program. In May, Social Security trustees said expenses would exceed revenue beginning in 2016, one year earlier than their previous forecast.

The Social Security Administration had projected an increase of 315,000 applicants for the 12 months ending Sept. 30 partly because the first baby boomers — those born right after World War II — are starting to retire.

The actual increase was higher. Agency statistics show that 2.57 million people requested benefits, up from the 2.10 million applications received during the previous 12 months. That’s an increase of 465,000, or 47 percent higher than the expected rise.

Another standard source of non-wage income is disability and workers compensation. Social Security is receiving more applications for disability, and at least anecdotally there is some evidence that people about to get laid off are attempting to tap the workers compensation system as a backup source of income, in effect saving their unemployment insurance. Filing a "stress claim" just prior to being laid off freezes the worker’s employment status: they remain employed but are not costing the employer wages.

Eventually, the workers compensation fund paid by employers is depleted and the rates employers pay into the system will rise--but as a stopgap, an injury or stress claim relieves both employer and employee.

This being a litigious society, I suspect there is a rise in employment-related lawsuits. One of our friends who operates a small restaurant was just served with…
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Phil's Favorites

Global Auto Industry Collapse Continues As October EU Data Shows No Relief

Courtesy of Zero Hedge

The outlook for the global automobile market has been increasingly dire lately, especially after a third quarter that saw sales drop in many major markets across the globe, including China. Now, the latest data from Europe suggests that the difficulties may be nowhere close to over despite optimistic fourth quarter guidance by companies like Volkswagen and Daimler AG. 

Deliveries of new passenger cars were down 7.4% in the EU and the European Free Trade Association in October from the year prior. This adds to a 23% drop that occurred during September according to data from the European Automobile Manufacture...



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Zero Hedge

Global Auto Industry Collapse Continues As October EU Data Shows No Relief

Courtesy of Zero Hedge

The outlook for the global automobile market has been increasingly dire lately, especially after a third quarter that saw sales drop in many major markets across the globe, including China. Now, the latest data from Europe suggests that the difficulties may be nowhere close to over despite optimistic fourth quarter guidance by companies like Volkswagen and Daimler AG. 

Deliveries of new passenger cars were down 7.4% in the EU and the European Free Trade Association in October from the year prior. This adds to a 23% drop that occurred during September according to data from the European Automobile Manufacture...



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Kimble Charting Solutions

Gold Bugs; Would Love This To Be A Double Top!

Courtesy of Chris Kimble.

Gold, Silver, and the precious metals industry have a pretty simple relationship with the U.S. Dollar: They perform better when the Dollar is weakening… and they tend to struggle when the Dollar is strengthening.

One of our favorite ratios to monitor for Gold Bugs is the U.S. Dollar/Gold ratio. It tells us when the Dollar is weakening or heading lower (which is good for gold) or when it is strengthening or heading higher (bad for gold).

Looking at the Dollar/Gold chart below, we can see that the ratio climbed higher from late 2011 to early 2016. This wreaked havoc on Gold prices. Since peaking in early 2016, the ratio has formed a broad declining channel (pink shaded area). Each swing lower has provided a tailwind for Gold prices, while each counter-swing higher has been a headwind.

in ...



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Insider Scoop

Macy's Receives Mixed Analyst Reaction After Q3 Earnings Beat, Sales Miss

Courtesy of Benzinga.

Related M Big Box Bonanza: Walmart Beats Most Estimates, But Brexit Could Steal Attention Mid-A...

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Members' Corner

NY Times: OPERATION INFEKTION

 

This is a three-part Opinion Video Series from NY Times about Russia’s meddling in the United States’ elections as part of its "decades-long campaign to tear the West apart." This is not fake news. Read more about the series here.

OPERATION INFEKTION

RUSSIAN DISINFORMATION: FROM COLD WAR TO KANYE

By Adam B. Ellick and Adam Westbrook

EPISODE 1

MEE...



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Chart School

Weekly Market Recap Nov 11, 2018

Courtesy of Blain.

This past week was saw another positive move up by bulls – especially in the Dow and S&P 500; the NASDAQ was not quite as enthusiastic.   Wednesday’s rally was on the legs of an election that was seen as market friendly or at least not as bad as it could have been.   Essentially – paying people a lot of money to get nothing done the next 2 years – woo hoo!

The market is interpreting Wedneday’s result as insuring that “no big things will get done,” in Washington between now and 2020, Craig Birk, chief investment officer at Personal Capital told MarketWatch. “The market appreciates the relative certainty of the slow legislative agenda.” he said.

“As President Trump plans his 2020 reelection campaign, a gridlocked Congress is unlik...



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Digital Currencies

Bitcoin's high energy consumption is a concern - but it may be a price worth paying

 

Bitcoin's high energy consumption is a concern – but it may be a price worth paying

Shutterstock

Courtesy of Steven Huckle, University of Sussex

Bitcoin recently turned ten years old. In that time, it has proved revolutionary because it ignores the need for modern money’s institutions to verify payments. Instead, Bitcoin relies on cryptographic techniques to prove identity and authenticity.

However, the price to pay for all of this innovation is a high carbon footprint, created by Bitc...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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Biotech

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

 

Gene-editing technique CRISPR identifies dangerous breast cancer mutations

Breast cancer type 1 (BRCA1) is a human tumor suppressor gene, found in all humans. Its protein, also called by the synonym BRCA1, is responsible for repairing DNA. ibreakstock/Shutterstock.com

By Jay Shendure, University of Washington; Greg Findlay, ...



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Mapping The Market

Mistakes were Made. (And, Yes, by Me.)

Via Jean-Luc:

Famed investor reflecting on his mistakes:

Mistakes were Made. (And, Yes, by Me.)

One that stands out for me:

Instead of focusing on how value factors in general did in identifying attractive stocks, I rushed to proclaim price-to-sales the winner. That was, until it wasn’t. I guess there’s a reason for the proclamation “The king is dead, long live the king” when a monarchy changes hands. As we continued to update the book, price-to-sales was no longer the “best” single value factor, replaced by others, depending upon the time frames examined. I had also become a lot more sophisticated in my analysis—thanks to criticism of my earlier work—and realized that everything, including factors, moves in and out of favor, depending upon the market environment. I also realized...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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