Capital Returns by Edward Chancellor

Author:Edward Chancellor
Language: eng
Format: epub
ISBN: 9781137571663
Publisher: Palgrave Macmillan UK
Published: 2016-06-15T00:00:00+00:00

1 On 24 February 2003, shares in Royal Ahold fell 63 per cent on the NYSE after the Dutch supermarket group announced earnings had been overstated by close to $500m. The accounting problems related to the operations of its US foodservice business

2 In The Economist (27 February 2003), a brokerage analyst complained of Ahold management’s “attempt to frighten us.

3 See Capital Account, pp.209–12

4 Marathon subsequently acquired shares in Ahold in mid-2014, after the company had shrunk its business and shifted the focus of executive remuneration from an EPS target to return on capital employed

5 Used in both insurance and reinsurance, the combined ratio is calculated as the sum of incurred losses and expenses, divided by earned premium. A combined ratio of more than 100 per cent indicates an underwriting loss, while below 100 per cent indicates an underwriting profit

6 Sampo’s share price has continued to perform strongly, up 75 per cent in US dollars from the time this article was written to the end of 2014

7 The Lehman CEO held nearly 11m shares in the Wall Street bank. From their peak valuation to Lehman’s bankruptcy in September 2009, Fuld may have suffered a paper loss of up to $931m (see Lucian Bebchuk et al., “The Wages of Failure: Executive Compensation at Bear Stearns and Lehman 2000–2008,” Yale Journal on Regulation, 2010)

8 Diversification (or “diworsification,” as Peter Lynch calls it) does not always bring unalloyed benefits. Marathon itself had longstanding issues with the Keswick family’s control of Jardine Matheson

9 The principle, widely applied from statistics to ecology, derives from Leo Tolstoy’s book Anna Karenina, which presents an idea that for a marriage to be happy it must succeed in several key aspects, while failure on even one such aspect can produce an unhappy marriage

10 Gucci got into trouble in the 1980s as family disputes ran out of control. The last Gucci family member to head the company was murdered in 1995. His wife was later convicted of hiring the killers. PPR gained control of Gucci in 2003

11 A couple of months after this piece was written, Mexico’s Federal Competition Commission rescinded Slim’s $925m fine

12 Mr. Rupert’s departure from Richemont turned out to be short-lived. He returned to the company as chairman in September 2014

13 Rightmove has developed a lock on the market for UK residential listings, and by the end of 2014, its shares were up over 400 per cent in US dollars since floating in 2006

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