ebook essays pieces of the puzzle
Tuesday, August 9th, 2011
accentuate the positive

Two years ago this week, I tromped the grounds of Hazeltine National Golf Club for seven days during the PGA Championship, taking photographs, sitting in on player interviews, and doing other chores as the historian of the club.  In a posting thereafter, I reflected on how embedded our expectations become and pondered the surprising outcome that day.  And I wrote:  “Time will tell if this year’s PGA will mark a turning point in the career of Tiger Woods or the future of men’s professional golf.”  Well, yes, with a little help from a fender bender three months later.

After that incident, I wrote about how it’s easy to get stuck in one dimension, as the Tour did with Woods and investment firms often do with their stars.  In that piece, I looked back to yet another posting, one that focused on the competitive keys that were the subject of those great advertisements from Accenture that featured Woods, many of which could be applied to investing.

Thinking back on all of that got me wondering how Accenture has done since it decided to drop the centerpiece of its promotional campaign.

The chart, which covers the decade since the company went public, gives the answer.  The stock has been a winner over the long run, both in absolute and relative terms, and has done very well since its decision regarding Woods in December of 2009.  The middle panel shows free cash flow and net income (in millions) and the bottom panel the free cash flow yield on the stock measured quarterly.

The firm’s brand was tied to a tarnished icon — and it made the hard decision to start over, with no apparent ill effects.  As the song goes, “Accentuate the positive, eliminate the negative . . ..”  (Chart:  Bloomberg terminal.)

vectors of contagion

I noticed last week that there were some hits on a piece that I had written in the fall of 2010 about vectors of contagion.  The premise of the piece still applies, in case you want to take a look too.