Apr 2, 2012

Groupon Accounting Issues

April 2, 2012

The ISM manufacturing index for March was in line with expectations at 53.4 vs. 52.4 in February. The chart below shows the ISM since 1996. Remember that any measure above 50 represents expansion.

Coty has offered roughly $10 billion in an unsolicited bid for Avon Products (AVP), or about $23.25 per share. The bid is a 20% premium to Fridays’ close. Coty, which is the seller of perfumes by Heidi Klum and Beyonce, is owned by Reckitt Benckiser Group PLC. AVP has been struggling lately, and has been searching for a new CEO to replace Andrea Jung.

Concerns about China’s economy have been foremost in investor’s minds recently. Yesterday the China Federation of Logistics and Purchasing said the official purchasing manager’s index rose from 51 in February to 53.1 in March, easing some of those fears.

I haven’t been directly tracking this, but I think we made it almost three weeks without discussing Greece. Prime Minister Lucas Papademos said on Friday that the country may require a third rescue package. “Greece will do everything possible to make a third adjustment program unnecessary. Having said that, markets may not be accessible by Greece even if it has implemented fully all measures agreed on. It cannot be excluded that some financial support may be necessary, but we must try hard to avoid such an outcome.”

Global Payments (GPN) has acknowledged a security breach that may have allowed hackers to steal millions of Visa and MasterCard account holder data.

Groupon (GRPN) is restating its 2011 results based upon material weakness in their accounting controls. I don’t see where this is a big surprise given the issues the company had with accounting right before their November IPO. The stock is down 12% today.

While a small handful of IPOs have been well received, and of course the Facebook IPO is expected sometime in May, the overall market has been weak. Global IPOs raised $16.2 billion in the first quarter, the smallest amount in three years.

The NY Times is reporting that pension fund returns have fallen as a result of asset allocation shifts towards hedge funds, private equity funds, and real estate. Fees are rising while returns are falling. When compared to funds that stuck to more conventional asset allocations, returns have lagged by over 100bps according to the article.

The NCAA Finals are tonight, pitting traditional powers Kentucky and Kansas for the crown. Personally, I missed seeing Butler in the Final Four, and would have enjoyed a Butler-Gonazaga final.

Have a great day


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