Value Investing Group Presents a Webinar

Accounting Case Studies

Monday March 6, 2017 2:00 PM - 5:00 PM

Available as: Webcast;Online;
Categories: Value Investing

Case Studies in Accounting Disasters

“Accounting is the Rosetta Stone of business”, according to Mr. Warren Buffett. When asked about an accounting book recommendation he said, “ I would suggest reading Berkshire reports and things like magazine articles about accounting scandals. You need to know how figures are put together.” In this online event we will do case studies on accounting disasters. Each speaker will present a case study in accounting, which will be followed by Q&A and discussion with informed panelists. Attendees will participate, chat and submit their questions online.


2:00 PM: Opening remarks

2:05 PM: Presentation and Case Study # 1

Eugene Soltes, Jakurski Family Associate, Professor of Business Administration, Harvard Business School

2:30 – 3:00 PM: Q&A and Discussion

3:00 – 3:10 PM: Break and e-networking

3:10 – 3:40 PM: Presentation and Case Study # 2
Zach Gast, CFA, Director of Research, Center for Financial Research and Analysis (CFRA)

3:40 – 4:10 PM: Q&A and Discussion

4:10 – 4:20 PM: Break and e-networking

4:20 – 4:50 PM: Presentation and Case Study # 3
Joel Litman,
Chief Investment Strategist, Valens Equities and Valens Credit

5:20 PM: Closing remarks and e-networking

Case Study #1—Beazer Homes "Cookie Jar" Accounting

Between 2000 and 2005, Beazer homes reported net income by recording improper accounting reserves and tried to meet analyst's expectations. For background reading, please read this overview by prosecutors, Bezer Homes' SEC filing and pages 175-183 of Mr. Soltes book, "Why They Do It: Inside the Mind of the White-Collar Criminal" available here.

Case Study #2—Triumph Group International & Santander Consumer

Triumph Group International (TGI) - TGI's stock was holding steady as 2014 came to a close. Despite industry headwinds, recent acquisitions were helping to maintain margins and support the stock. TGI represented, though, a case study in the role of new fair value rules for acquisitions and the outsized impact they can have on the income statement going forward.

Santander Consumer (SC) - We highlight a meaningful omission in the presentation of underwriting risk at Santander.

Case Study #3—Three Cases for UAFRS versus GAAP/IFRS: A uniform look at AMD, FB, and BMW (

Investors, management teams, and the SEC have noted an erosion in the quality of financial reporting. Under GAAP and IFRS, severely inconsistent rules confound comparisons and trend analysis of assets, earnings, credit, and even the statement of cash flows.

How different can a company look under globally consistent UAFRS, Uniform Adjusted Financial Reporting Standards?

In January 2015, Barron's highlighted AMD (AMD) as a long idea at $2.60 per share. The stock had been depressed by headline bankruptcy concerns. UAFRS showed strong underlying cash flows that GAAP did not. AMD's stock has hit $9 since.
More Information Here

In January 2016, Facebook (FB)'s valuation at $95 per share looked expensive and its performance looked poor under GAAP. In SeekingAlpha, UAFRS-based reporting showed a far higher quality, inexpensive firm. FB has increased $25 to $35 since. 
More Information Here

Mid-2016, at a CFA conference at Bloomberg in Frankfurt, Germany, BMW's stock looked as cheap as it had for two years with an as-reported P/E ratio of 8. Under UAFRS, the earnings multiple has persisted above 22X, explaining BMW's sideways market performance.
More Information Here

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Program Details

March 6, 2017


Members $20
Nonmembers $50

Eugene Soltes, Jakurski Family Associate Professor of Business Administration, Harvard Business School
Zach Gast, CFA, Director of Research, Center for Financial  Research and Analysis (CFRA)
Joel Litman, Chief Investment Strategist, Valens Equities and Valens Credit

Michael Carniol
, PhD student, accounting, The Wharton School of the University of Pensylvania
Vishal Mishra, CFA, Value and Special Situation Investor, Manager, Private Value-Investing Partnership
Fernando Alvarez, PhD, NYU-Stern, Co-Author, Financial Statement Analysis: A Practitioner's Guide (Wiley)
James F. Basili, Founder and Managing Partner, Blacktree Capital Management
Nadav Manham, Founder and Publisher, Private Investment Brief

Vishal Mishra, CFA
Tom Fogarty

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