XBRL – The New Reality

Last Wednesday, the Securities and Exchange Commission (SEC) adopted a proposal requiring that companies’ financial statements be filed with the agency in XBRL, otherwise known as eXtensible Business Reporting Language.

The SEC has outlined a three-year XBRL phase in schedule that begins for the largest accelerated filers in the fiscal period ending on or after June, 15 2009 and concludes with the fiscal period ending on or after June 15, 2001 for non-accelerated filers.

According to NIRI, the National Investor Relations Institute, the phase in schedule is as follows:
 



Year 1 Year 2 Year 3
U.S. (or non-U.S.) accelerated filers with a public float of $5B using U.S. GAAP (about 500 companies) All other accelerated filers All other filers, using U.S. GAAP or IFRS
Fiscal period ending on or after June 15, 2009 Fiscal period ending on or after June 15, 2010 Fiscal period ending on or after June 15, 2011

 

If you’d like to learn more about XBRL and what it means for your company, Business Wire recently hosted an informative webinar on the subject.  The SEC offers a host of information on its site at www.sec.gov/spotlight/xbrl.shtml and XBRL US, a local jurisdiction of XBRL International – a not-for-profit consortium of approximately 500 companies and agencies worldwide working together to build the XBRL language and promote and support its adoption, provides news and other information in an easy-to-use format.

XBRL is now a reality, so it’s time to take the plunge and begin planning for the inevitable.

 

Laurie Berman, lberman@pondel.com

Sell-Side Sundae

It is increasingly more difficult to understand what exactly a “buy” rating means when so many stocks are trading at all-time lows. Or perhaps “underweight” is a preferred term when it comes to characterizing an undervalued stock. It turns out that the very analysts who rate companies are just as confused.

Sundae

During a recent conversation with a sell side analyst, it became quite clear that determining whether a stock is a buy, sell or hold is like deciding whether you want whipped cream, chopped nuts or extra chocolate sauce on your sundae. They all appeal to different tastes, and while some are preferred, others are undeniably abhorred.
 
Personally, I despise chopped nuts. And if chopped nuts are the equivalent of a “sell” rating, so does the Street for the most part. The sell sider said most analysts are afraid of issuing sell ratings because they usually don’t make anyone happy. Buy ratings, much like whipped cream, can give an investor a quick jolt of happiness. But if the stock goes down, the analyst who issued the rating will have egg, or in this case, whipped cream all over his or her face. So where does that leave us? Extra chocolate sauce.
 
Yes, much like a hold rating, extra chocolate sauce never hurts. In fact, many analysts will simply issue a hold rating for the sake of not ticking anyone off. When in doubt, go with a hold.
 
And how about that cherry on top? Well, there is no such equivalent rating. Actually, the cherry is that extra dollop of knowledge you glean from having a conversation with an analyst, especially when the rating is a hold. A conversation will enable you to learn what an analyst really thinks about a stock and its potential before it melts away.

 

Evan Pondel, Vice President, epondel@pondel.com
 
 

Poetry in Money

Where do people who work at hedge funds seek inspiration when times are tough? Try “The Heaven-Sent Leaf,” a collection of poems written by Katy Lederer, who worked at D.E. Shaw, one of the biggest hedge funds on Wall Street. I say worked because her poetry has provided enough financial wherewithal to leave her job at D.E. Shaw and travel the country on a book tour. An excerpt:
 

Today, from the bridge, the East River is sparkling.
 
The money is swirling around the tall buildings like tides or like tithes,
 
And I wonder, does anyone swim in the river, I wonder, does anyone pray?

 

– Evan Pondel, Vice President, epondel@pondel.com