Today I post here what has been to me a rather impostant, if somewhat suprisingly discreet post in FT’s Alphaville about what sometimes happens in companies’s valuations. It follows an event of sudden drop in the share price of Quindell PLC after Gotham City, an equity research house release their valuation report about the company. Alphaville’s Dan McCrum sums it up brilliantly:
”Without attesting to the quality of the research, which goes into great detail about the accounting, two things immediately jump out: Quindell listed via reverse merger in 2011, since when it has had three different auditors.
Other tit-bits include the allegation that the New York office does not exist, and that while the chief executive invested £11.5m into the company between 2001 and 2005, the company spent the same amount building a country club.”
Fair markets deserve fair practices of Research houses, proper checks of conflicts of interests. And a way of accepting the checks and balances of assuring transparent and competitive markets wich is accepted by all involved. Otherwise the point of much of criticism of Market Economics is strong indeed.