Archive for August, 2010

Barron’s: No Drilling? No Problem: Plumbing the Depths

Sunday, August 15th, 2010

From Barron’s, Aug. 15, 2010:

You don’t have to drill too deep to find intriguing plays on the Gulf’s oil spill—just go to school. Tulane University professor Peter Ricchiuti and the students in his stock-research program called Burkenroad Reports are touting Carbo Ceramics (ticker: CRR), Denbury Resources (DNR) and McMoRan Exploration (MMR) as best poised to benefit from the drilling moratorium arising from the spill.

To read the article in its entirety, visit Barrons.com.

http://online.barrons.com/article/SB50001424052970203880104575419351025307126.html


Honors students are on the case

Monday, August 9th, 2010

It’s not that unusual for business students to read cases on companies like Google, General Electric and Time-Warner in their management classes. What is a little unusual is for the students themselves to write the cases.

Since last year, Freeman honors students have fulfilled their senior thesis requirement in a novel way: The students write Harvard Business School-style cases on companies or business issues—complete with teaching notes—and then present those cases to classmates.

“What we’re trying to do is identify our very best students—the ones who have the highest potential for future scholarship—and get them started now on their scholarly careers,” explains Jim Biteman, clinical professor of management, who co-teaches the thesis course with Michael Wilson, professor of practice in strategy, management and organizational behavior. “Part of it is teaching the case to the class and part of it is explaining the process of the research and how they came up with what they did.”

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CEOs’ zeal for acquisitions flags when their own money is at stake, Freeman researcher says

Monday, August 2nd, 2010

Corporate-acquisition activity has been in the doldrums, and the finger of blame has tended to be pointed at investors. In the prevailing view, CEOs are typically empire builders, willing and able to buy, but shareholders have lately lacked the requisite “animal spirits,” a contrast said to have been vividly on display recently in the collapse of Prudential’s bid to buy AIA.

New research by Cynthia Devers suggests that CEOs are more likely to exercise stock options and sell company stock following acquisitions.

But now new research led by the Freeman School’s Cynthia Devers suggests that CEOs may not be the fervent believers in acquisitions that the conventional wisdom suggests they are. For a group that supposedly has a fire to acquire, CEOs are apparently less than eager to leave their own money at risk once their deals are announced, according to a report to be presented at the annual meeting of the Academy of Management (Montreal, Aug. 7-10).

The study of more than 2,000 companies over a period of 12 years finds that CEOs are 28 percent more likely to exercise stock options and 24 percent more likely to sell company stock within three months following acquisition announcements than they are at times in which no acquisitions are announced.

“Although executives exercise options and sell shares for all sorts of reasons, it does seem odd that they’re especially likely to do so in the aftermath of acquisitions that they presumably engineer for the future good of the company,” says Devers, an associate professor of management at the Freeman School, who carried out the research with Gerry McNamara of Michigan State University, Michele E. Yoder of the University of Wisconsin, Madison and Jerayr Haleblian of the University of California, Riverside.

In the words of the study, “Our findings show that in the quarters following acquisition announcements, CEOs reduced their equity-based holdings by cashing out stock options and selling firm stock…presumably to reduce the exposure of their equity-based holdings to potential firm stock price decreases. Thus, their behavior is inconsistent with the idea that CEOs are confident that their acquisitions will generate substantial long-term shareholder value.”

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