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It's Simply Unfair What Is Happening To Fair Isaac's Shareholders...

Reggie Middleton's picture





 

Several months ago I posted a mail from a reader's rant on FICO (see Fair  Isaac May Get Treated Unfairly When…), along with our own take on the on the situation (subscribers see FICO Note, click here to subscribe). Here's an excerpt from the said reader's take: 

Short FICO. This company engineered a stock-back program in Nov 2011. The Stock buy-back was equivalent to 20% of its market cap at the time. The three executives left the company and cash in their stock options. The company had 3 CEOs in 4 years. The Company latest quarter was slightly down, without the massive buy-back the share count would have meant that the stock had lower earnings per share YoY. What is staggering is while the company did this massive stock buy-back, some execs (including the 3 execs departing) sold at price sometimes below the price the company was buying back its stock at. If the company was doing such a good deal by buying the stock "cheap" at around 40 USD, why would the execs sell their "cheap" stock at 39 USD?

Now recently the company announced its quarterly earnings, poor data, the stock plunges by 10.5%, next thing you know SECput the Rule 201 alternative uptick rule. The next day the stock is up 10.5%, but of course nothing is done to prevent the stock to move up more than 10% a day. The same happened on the same day with Vulcan Materials which released its earnings, really crappy (a lot more than FICO), Vulcan Materials is a Einhorn short, and yet again you have the rule 201 implemented the next day....

Said BoomBustBlogger returned with some more "unfair" treatment of Fair Isaac, viewable from this link - Fair Isaac May Get Treated Unfairly When The Newest Credit Bubble Bursts. ....And here come's FCO's earnings, as reported at CNBC:

MINNEAPOLIS, Nov. 1, 2012 /PRNewswire via COMTEX/ -- FICO (NYSE: FICO), the leading provider of analytics and decision management technology, today announced financial results for its fourth fiscal quarter ended September 30, 2012. Fourth Quarter Fiscal 2012 Results Net income for the quarter totaled $21.2 million, or $0.60 per share, versus $24.6 million, or $0.64 per share, reported in the prior year period. The current quarter results include $3.3 million, net of tax, or $0.09 per share, in restructuring and acquisition related costs.

Well. guess what happened the following day... #0033cc;">NYSE stocks posting largest percentage decreases 02 Nov 2012  -  The Associated Press

 


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Mon, 11/05/2012 - 14:22 | Link to Comment aerojet
aerojet's picture

Now I know why I've been seeing so many resumes crossing my desk from people who all have recent experience at FICO or who are current employees there.

Mon, 11/05/2012 - 13:48 | Link to Comment kaiserhoff
kaiserhoff's picture

Nice call Reggie.  As to Jack's question, it's always safer to buy puts.  There is no sensible way for individuals to short and safely stay short.  If the puts are not listed on an exchange, take a pass.  Custom designed options are always overpriced.

Mon, 11/05/2012 - 13:22 | Link to Comment Jack Sheet
Jack Sheet's picture

Know anyone made money shorting a stock?

Mon, 11/05/2012 - 13:13 | Link to Comment Ban KKiller
Ban KKiller's picture

Credit reporting companies are not to be trusted. I think that is the moral of this story? 

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