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“All-in-the-Family” Earnings Management and Misgovernance in Asia (Bamboo Innovator Insight)

The following article is extracted from the Bamboo Innovator Insight weekly column blog related to the context and thought leadership behind the stock idea generation process of Asian wide-moat businesses that are featured in the monthly entitled The Moat Report Asia. Fellow value investors get to go behind the scene to learn thought-provoking timely insights on key macro and industry trends in Asia, as well as benefit from the occasional discussion of potential red flags, misgovernance or fraud-detection trails ahead of time to enhance the critical-thinking skill about the myriad pitfalls of investing in Asia at the microstructure- and firm-level.

Celltrion

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Chinese banks suspend mortgage approvals amid fund shortage

Chinese banks suspend mortgage approvals amid fund shortage

Staff Reporter

2013-09-24

China is once again facing a shortage of funds, with the benchmark overnight Shanghai Interbank Offered Rate (Shibor) rising to 3.56% from Sept. 6’s 2.95%, and banks have begun to suspend mortgage approvals, the Beijing-based China Times (not our sister paper) reports. China saw an unprecedented liquidity shortage in June, with the overnight Shibor on June 20 surging 578.4 basis points to 13.444%, a record high. Banks would typically start to tighten their mortgage approvals near the end of a year, but many have already begun doing so, the paper said. When Mr Lu applied for a mortgage for his house, a bank clerk told him that the bank may at best approve the mortgage a month later and there is no guarantee when the approval will be made. An unnamed bank executive confirmed that most banks have faced tightening approval practices in mortgages and other loans as demand for loans far exceeds the funds available. The executive, however, said the suspension of loan approvals began just one week before the Mid-Autumn Festival on Sept. 19, and liquidity will remain tight until the end of this month for his bank. Read more of this post

Pension funds and other large investors are throwing away billions of dollars a year on worthless advice from investment consultants, according to academic research

September 22, 2013 4:16 am

Billions of dollars wasted on investment advice

By Steve Johnson

Pension funds and other large investors are throwing away billions of dollars a year on worthless advice from investment consultants, according to academic research. The funds recommended by consultants do no better than any other, and by some measures they underperform the wider market significantly, the research* found. On an equal-weighted basis, US equity funds recommended by consultants underperformed other funds by 1.1 per cent a year between 1999 and 2011, according to analysis of 29 consultancies accounting for more than 90 per cent of the market by a team from Oxford university’s Saïd Business School. “The enormous power wielded by consultants is not matched by their performance,” said Jose Martinez, one of the authors of the study. “In US equities, one of the largest asset classes, investment consultants as an industry appear to add no value in fund selection,” added co-author Howard Jones. Read more of this post

Dynamic Duos: 5 Brilliant Business Lessons From Warby Parker’s CEOs

Dynamic Duos: 5 Brilliant Business Lessons From Warby Parker’s CEOs

LAUNCHED IN 2010, EYEWEAR RETAILER WARBY PARKER HAS TRANSFORMED THE WAY MANY CONSUMERS THINK ABOUT GLASSES, SELLING ULTRA-STYLISH SPECS–ONLINE–FOR LESS THAN $100.

Neil Blumenthal and David GilboaCofounders and CEOs

Warby Parker started with a casual conversation among friends. Four Wharton MBA students were hanging out one morning on campus, and one of them, Dave Gilboa, happened to mention how annoyed he was with the high price of eyeglasses. They talked over the problem a bit, wondering if glasses might somehow work as an online business. “I remember going home and just constantly thinking about this idea, having trouble going to sleep that night,” recalls Neil Blumenthal, who, along with Gilboa and the other two friends, founded the transformative web retailer in 2010. Three years later, Warby Parker is a major success. The online business–which has received $55 million in funding so far–combines innovations like home try-on with high-end design and a smooth user experience. And the company is now expanding to brick-and-mortar stores, an effort that should get a boost now that J. Crew CEO Mickey Drexler has joined Warby Parker’s board. Co-CEOs Blumenthal and Gilboa have made plenty of smart decisions while growing the business. They recently talked to Fast Company about their approach. Read more of this post

Three Signs That You Should Kill an Innovative Idea

Three Signs That You Should Kill an Innovative Idea

by Michael Schrage  |   8:00 AM September 24, 2013

Whether you’re a digital start-up or an institutional entrepreneur, three simple heuristics offer an excellent way to determine whether a fledgling innovation initiative should be put out of its misery (and yours).  Even if the innovation business case appears compelling and its numbers sound, should these three pathologies appear, don’t hesitate or delay: Kill your innovation effort ASAP.

1) No Pleasant Surprises

Almost all innovation efforts have the hiccoughs and bumps in the road. Design schedules invariably slip and that “quick-and-dirty” prototype ends up costing much more than expected. That’s normal. But listen closely for and pay attention to the pleasant surprises:  The coding that takes two weeks to develop and test instead of two months; the material that has more malleability and strength at lower cost; that really smart supplier who makes one of her smarter designers available to collaborate. The absence of pleasant surprise is not unlike the dog that doesn’t bark: A signal that something that should be happening isn’t. If the innovation idea or proposal really represents a novel value creation opportunity, there’ll be serendipities sprinkled amidst the inevitable unpleasantness. Those “small wins” may not look or feel like much but, almost always, they signal new opportunities for exploitation and advance. Read more of this post

Chanel’s Wertheimer Family Seen With $19 Billion Fortune

Chanel’s Wertheimer Family Seen With $19 Billion Fortune

Chanel designer Karl Lagerfeld, with his shock of white hair, black glasses and leather gloves, will be the center of attention in Paris next Tuesday when he debuts the luxury-goods company’s latest ready-to-wear collection during the city’s Fashion Week. “The Chanel show by far generates the most interest,” Dana Thomas, the author of “Deluxe,” a book on the luxury industry, said in a phone interview from the French capital. “If you only go to one show a season, Chanel’s the one you have to go to.” Lagerfeld’s billionaire patrons of 30 years, Chanel owners Alain and Gerard Wertheimer, will walk in unnoticed, according to Thomas. The brothers will sit in the fourth or fifth row and slip away afterward. The pair keep their private lives — and their finances — out of the spotlight to such an extent that their combined $19.2 billion fortune is more than double previous estimates. According to its annual report filed with Kamer van Koophandel, the Dutch chamber of commerce, Chanel International BV reported consolidated net revenue of $5.9 billion in 2011, and earnings before interest, tax, depreciation and amortization of $1.4 billion. Read more of this post

China Probes Juice Makers into Allegations of Processing Rotten Fruits

China Probes Juice Makers into Allegations of Processing Rotten Fruits

09-24 11:24 Caijing

Reports said some juice factories based in central China’s Anhui of purchasing bad fruits for 0.4 yuan($0.07) per kilogram to make fortified juice as a part of their cost-saving measures.

China’s food regulator has launched an urgent investigation into allegations against several home juice makers that reportedly use cheap rotten fruits for production in the country’s latest food scandal, highlighting increasing concerns over food safety among the public.  Reports said some juice factories based in central China’s Anhui purchased bad fruits for 0.4 yuan($0.07) per kilogram to make fortified juice as part of their cost-saving measures. Read more of this post

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