Savvy money managers know how to figure out what’s really happening with a company: they skip over the chairman’s letter and the colorful graphics in the annual report and flip straight to the back to start reading the small print. That’s where most of the good stuff – insider transactions with company executives, board members or family members, off-the-books partnerships and buried options expenses — are discussed in loving detail. “I don’t even waste much of my time with the other stuff,” says David Tice, portfolio manager for the Prudent Bear mutual fund, and someone who prides himself on ferreting out corporate secrets. “I head straight for the small print.” But for the typical individual investor, those footnotes are a thicket of poorly-worded English that are all-but impossible to understand. “Obfuscation is the name of the gamefor a lot of companies,” said Brad Perry, former chairman of mutual fund company David L. Babson, in an article that appeared in The New York Times on June 4, 2000.
Book Details:
- Author: Michelle Leder
- ISBN: 9780470357002
- Year Published: 2003
- Pages: 212
- BISAC: BUS036000, BUSINESS & ECONOMICS/Investments & Securities / General
About the Book and Topic:
Savvy money managers know how to figure out what’s really happening with a company: they skip over the chairman’s letter and the colorful graphics in the annual report and flip straight to the back to start reading the small print. That’s where most of the good stuff – insider transactions with company executives, board members or family members, off-the-books partnerships and buried options expenses — are discussed in loving detail. “I don’t even waste much of my time with the other stuff,” says David Tice, portfolio manager for the Prudent Bear mutual fund, and someone who prides himself on ferreting out corporate secrets. “I head straight for the small print.” But for the typical individual investor, those footnotes are a thicket of poorly-worded English that are all-but impossible to understand. “Obfuscation is the name of the gamefor a lot of companies,” said Brad Perry, former chairman of mutual fund company David L. Babson, in an article that appeared in The New York Times on June 4, 2000.
This book will help readers understand how to cut through confusing footnotes and explain why it’s so important now, in light of the recent spate of accounting fiascos such as Enron, Worldcom, Adelphia Communications and Global Crossing, to pay attention to the small print. The book will teach investors how they can begin to analyze footnotes on their own. By using numerous examples of actual footnotes that have appeared in recent annual reports, each word of the footnote will be dissected and explained in easy-to-understand language. The book will also examine how because of the recent accounting scandals, these little snippets of information have already become a more comprehensive portion of a company’s annual report. For example, in IBM’s 2001 annual report, nearly half of the 80-page report was taken up by carefully worded footnotes. But the problem isn’t just at American companies. The footnotes phenomenon has world-wide impact. In an article that appeared in the July 12, 2002 edition of The Wall Street Journal, Collette Neuville, a 64 year-old grandmother and shareholder rights activist who lives in France, explained how she was able to decipher the workings at Vivendi Universal SA by carefully reading the company’s footnotes. “Investors can no longer remain neutral,” said Ms. Neuville. “There were certain elements of the debt that didn’t appear except to the very observant,” she says.
* Gives investors the tools they need to make better, more infomed, decisions. * Includes several examples of specific companies and how they reported their financials to show readers the impact of footnotes on the bottom line.
About the Author
Michelle Leder (Peekskill, NY) has been a business journalist for the past 14 years. She currently works as a full-time freelancer where she writes regularly for The New York Times (Money and Business section), Bloomberg Personal Finance and Mutual Funds magazine. Her work has also appeared in Parents, Business Week, Crain’s New York Business, and Fortune Small Business. In 1999 and 2000, she was the personal finance columnist for Lifetime TV.com’s Money and Career pages. Prior to freelancing, she spent 10 years working as a business reporter, and later business editor, for daily newspapers in Florida, Connecticut and New York. As a daily journalist, she won numerous awards, including the Society of Business Editors and Writer’s prestigous Best in Business award (1996 and 1997) and several First Place awards in the annual New York State Associated Press contest. She holds a degree in economics from Brandeis University in Waltham, MA and lives in New York’s Hudson River Valley.