Thursday, February 9, 2017
Analyzing Corporate Statements
We regularly analyze corporate statements, annual reports, sales reports and other business related material. In it, we learn content, but we also learn 'spin' that is, information that seeks to change communicative meaning without being technically deceptive. This insight can prove valuable to investors.
Target had major expansion plans.
Target boldly took advantage of political correctness and the main stream media/celebrity push, in stating that a man could use a woman's bathroom "of his own choosing" if he "identified" as a woman.
This did not go well with parents of young girls. A man's mental heath being so singularly in jeopardy as to convince him he is not who he is, by itself, is alarming, but to allow him access to little girls in a bathroom was all too much for parent shoppers.
When the public reacted with anger stating that this could be putting children at risk, Target doubled down and further divided customers with its "identity politics"; the single most divisive technique used in America today. Target took to lecturing and insulting Americans on this 'new morality' where someone who was in need of mental health intervention, is now a "cause" for celebrities. Given the main stream media predictions on the elections, Target's CEO likely felt great confidence in lecturing Americans on the new morality.
When threatened with a boycott, Target responded harshly.
A boycott ensued and since that time, Target has had more than 10 billion dollars in reduced stock value and had major plans for new stores, manned by robots, which had been long planned and invested in.
Here is the announcement canceling it.
Target has denied that their same store sales losses have been due to the boycott.
At Target, we regularly pause to evaluate our business and have to make tough choices about where our company is best served to invest our time and resources. We recently made some changes to the innovation portfolio to refocus our efforts on supporting our core business, both in stores and online, and delivering against our strategic priorities. Target remains absolutely committed to pursuing what’s next. We see a tremendous opportunity to drive innovation in areas that will fuel our growth both in the short and long-term in areas such as digital, technology, supply chain and merchandising.
Here is the statement again:
At Target, we regularly pause to evaluate our business
Here the use of "normal" begins the statement. We have two principles in play:
1. Priority of the opening sentence
2. The use of "normal" in analysis.
1. Where the statement begins is always important and sometimes it is so important that it tells us why the statement is being made.
2. Next, we have the issue of "normal" and here it is in a "hina clause"; that is, a need to explain why. When someone is dealing with something very "not" normal, in which they wish to conceal, they will openly portray it as "normal."
This signals to us that it is anything but normal.
3. Explanation of why the "regular pause" is made:
and have to make tough choices about where our company is best served to invest our time and resources.
Companies do often pause to re-evaluate but it is the need to call the pause "regular" here, coupled with the need to explain "why" the pause is being made that greatly increase the sensitivity of such. When we add the principle of "priority" to the statement, it becomes outstanding for the analyst.
We recently made some changes to the innovation portfolio to refocus our efforts on supporting our core business, both in stores and online, and delivering against our strategic priorities.
Note minimization. This was a major 'groundbreaking' plan is now labeled as "some changes" to the "innovation portfolio.
Target remains absolutely committed to pursuing what’s next.
The weakness is seen in the need to make the commitment sensitive with "absolutely."
Shareholders should now be aware that leadership is very likely divided in their commitment to the program of new robotic stores.
The word "absolutely" is not necessary and weakens the commitment by 'attempting to seal off every area of weakness.'
Stronger? "We will..."
This commitment is not to building the announced plans but to pursuing "what" is next; with "what" being undefined.
This suggests to shareholders that Target leadership is uncertain about the future.
We see a tremendous opportunity to drive innovation in areas that will fuel our growth both in the short and long-term in areas such as digital, technology, supply chain and merchandising.
Note the order as important. What do they see?
Do they see growth?
They see not only an opportunity to drive innovation (the focus is on innovation, not growth) but "tremendous" opportunity.
They do not see tremendous potential in growth, but in innovation. This is very different and it puts distance between what they "see" and "growth."
Note that "tremendous" and "growth" are in the same sentence quite purposely. It is by design.
In the faltering stock price, this is intended to have an impact, particularly on portfolio managers who's buying, selling and holding of large portions of stock, have impact upon the value.
Identity politics continues to divide and enrage Americans as the list of "hyphenations" grows as does the alphabet lettering. Eventually, identified groups recognize the exploitation by politicians for political gain, and by celebrities for publicity, and a backlash of anger results.
How powerful is moral narcissism?
Target may have identified less than .000001 % of a customer base, and chose to taunt and insult their client base upon it.
Listening to hearings shows the absurdity of identity politics. Eventually, those who are being used as pawns by politicians are likely to become angry.
'With military upgrades and weapons technology showing missiles can now be fired from off sea ships, Admiral, and more than 3 billion dollars investment, can you tell me how this new technology is going to impact transgendered Americans?'
Statement analysis is used in law enforcement, business, social sciences, journalism and wherever deception detection and content analysis is needed.