The Cardinal Rule

We could not help but notice during the telecast of Monday Night Football on ESPN this week that the new home of the Arizona Cardinals is “University of Phoenix” Stadium. University of Phoenix’s parent is Apollo Group, a former high flying Nasdaq stock that has been a prominent corporate citizen in the Valley of the Sun. While we are certainly not opposed to higher education here at UTC, the name of the new home of the Arizona Cardinals did set our antennae a-flutter as it brought back memories of numerous naming right deals that were consummated in years past. 

Who remembers the carefree days spent eating hot dogs and pounding beers in Houston when the Houston Astros played in Enron Field.  Ok, truth be told we never attended a game there as we think Houston is a malaria-ridden swamp, but you get the idea. The Tennessee Titans enjoyed some of their franchise’s best years at Adelphia Field, at least until the company went bankrupt and the founder went to jail.  Or perhaps CMGI field, named after a former red-hot internet company whose stock subsequently declined 99% after the deal was inked. And for fear of triggering nightmares among some of you we will not even mention 3Com Park and that stocks subsequent performance.

Of course, the most notorious example occurred several years ago in Philadelphia shortly after First Union Bank acquired CoreStates Bank and renamed the old Philly Spectrum the “First Union Center”. Erudite Flyers fans soon renamed it the “FU Center” in spontaneous chants which mercifully ended when Wachovia bought First Union in 2003.  Is it any surprise that current CEO G. Kennedy Thompson was recently the subject of an unflattering profile in the Wall Street Journal and is under the gun as his stock continues to underperform the peer group and institutional investors grow restless?

Slap your name on a stadium and we will short your stock. Forget creating fancy trading algorithms or buying the Dogs of the Dow. Because this is one investment methodology that is as foolproof as it gets on Wall Street. Thus we were not too surprised when we powered up our trading turret this morning and were greeted with the following news:

-------------
Apollo Group tumbles on results, options woes

This is a terrible quarter and likely raises many questions about the health of the business model,” wrote Prudential Equity Group LLC analyst Steven Barlow, in a note to clients. Prudential rates the stock “neutral.” The results exclude the possible impact of accounting changes from the Phoenix-based company’s ongoing review of its stock option grant practices. Apollo said in June that it had received a subpoena from the U.S. Attorney’s office in connection with the issue.

Comments:

<< Back to main