Word: cendant
(lookup in dictionary)
(lookup stats)
Dates: all
Sort By: most recent first
(reverse)
Even in a bull market, individual stocks can tank and leave small shareholders devastated. Recent examples include the staggering 84% decline at small-appliance maker Sunbeam and a 66% drop at franchise operator Cendant, where just last week chairman Walter Forbes resigned under pressure. Both are widely held stocks, and, predictably, both now face scores of lawsuits that allege accounting fraud. Ultimately, the cases against both will become class-action affairs and so serve all who owned the stocks before their meltdown. But even if the suits succeed, the overwhelming odds--and this is true in any suit over...
...weren't alone. Cendant, the result of last year's merger of HFS, a franchise company whose brands included Howard Johnson and Avis, and CUC, a kind of discount-shopping club, dazzled many a portfolio manager. After downplaying its accounting "irregularities" last April, the company last week revealed that the CUC side of the business had actually fabricated nearly $300 million in revenues over three years. The stock, which had rebounded to $25, quickly retreated to the high teens. It has since gone lower. And why shouldn't it? Most of the "earnings" that had jacked up the stock were...
Both Silverman and Cendant chairman Walter Forbes, (the former president of CUC) say they saw no hint of the fraud until very recently. Whether I believe them is less important than this: I had a chance to get out after the stock rallied on the first assurances, and I didn't. I wanted to be made whole--a costly impulse in these situations...
Despite the huge, multiyear nature of the fraud at Cendant, there were no criminal investigations through week's end. A number of class-action suits have been filed, but I doubt we will see much after the lawyers take their cuts. Looks as though the only winners here were the two top executives, who together sold more than $100 million worth of stock before we even smelled that first hint of trouble. The losers: those of us who believed that someone who once misled us wouldn't do it again...
...writes for thestreet.com website. He maintains some of his long position in Cendant. Nothing in this column should be construed as advice to buy or sell stocks...