The perils of Equity research on Valuation

Today I post here what has been to me a rather important if somewhat surprisingly discreet post in FT’s Alphaville about what sometimes happens to companies’ valuations. It follows an event of a sudden drop in the share price of Quindell PLC after Gotham City Research, an equity research house, released their valuation report about the company. Alphaville’s Dan McCrum sums it up brilliantly:

”Without attesting to the quality of the research, which goes into great detail about the accounting, two things immediately jump out: Quindell listed via reverse merger in 2011, since when it has had three different auditors.

Other tit-bits include the allegation that the New York office does not exist, and that while the chief executive invested ¬£11.5m into the company between 2001 and 2005, the company spent the same amount building a country club.”

Fair markets deserve fair practices of Research houses, proper checks of conflicts of interests. And a way of accepting the checks and balances of assuring transparent and competitive markets which is understood and accepted by all involved. Otherwise the point of much of criticism of Market Economics is strong indeed.

The full report of the Research in the link at the bottom. Further developments will certainly follow.


Quindell PLC: A Country Club Built On Quicksand


Portugal Market Pulse 3T 2013 – The edge share

This post is a re-post from Jones Lang LaSalle business consultancy services firm. It is an American firm but with offices worldwide. We are able to watch a video featuring Maria Empis from Strategy and Research  division.

Portugal Market Pulse 3T 2013.