AFTER THE BELL SEPTEMBER 2012 THE NEWSLETTER OF CLEVELAND FINANCE INSIDE THIS ISSUE Message from the President 1 Programming 2-6 Membership 7-8 Education 9 Advocacy 10 Feature 11-12 Career Services 13-14 Dear Members, I’m honored to serve as the 62nd President of CFA Society Cleveland and to work with our dedi- cated Board. Since June, we’ve been developing a strategic plan that focuses on delivering value to our members, through educational activities like luncheons, as well as advocacy efforts that build our CFA brand and promote our members locally. You may have noticed our new logo on our LinkedIn, Twitter and Facebook pages, our weekly emails and Eventbrite registration site, or this newsletter – we have a new shape, a new color scheme and a slight name change (dropping “of”). Our new look aligns with the CFA Institute’s rebranding to highlight our identity as a dynamic and growing global organization committed to actively building fair and effective financial markets. Program Chair Craig Cimoroni, CFA, has built a committee of volunteers who’ve put together an extremely impressive programming calendar. As usual, you can find a list of upcoming speakers in this newsletter, on our website or on our event registration page. Let me call your attention to the Arthur Laffer luncheon on Oct. 8. We thank CABE for partnering with us and Carnegie Investment Counsel for sponsoring the event. Advocacy Chair Wayne Chamberlain, CFA, and his committee have developed a road map for our Society’s advocacy efforts, particularly on the social media front. For more details, please see page 10. Membership Chair Paul Lebo, CFA, is working on outreach activities to increase the Society’s membership. On page 8, you’ll find two new membership classes approved by the Board that we hope will have a strong positive influence on the local financial community. The Local Society Membership is designed for current candidates or general investment and finance community professionals who don’t have plans to attempt the CFA Program. The Student Membership is designed for college students within CFASC’s footprint who have an interest in the CFA Program. By expanding our membership base, CFASC will increase awareness of the CFA Charter and the ethical principles on which it is based, while, at the same time, increasing the vibrancy of our Society by making it easier for local finance and capital market professionals to join the organiza- tion. If you or any of your colleagues are interested in joining under the new membership classes, please check out the Membership section of this newsletter or contact us directly. Also, don’t hesitate to contact me or another Board member if you have ideas about how we can make the Society stronger or provide more value to you. Sincerely, James M. Bailey, CFA President, CFA Society Cleveland 1 WWWCFACLEVELANDORG CFA Society Cleveland 3637 Medina Rd., Ste. 110 Medina, OH 44256 216-696-8066 Check us out on LinkedIn, Twitter or Facebook
the sustAiNABility of ClevelANd’s resideNtiAl ANd CommerCiAl revitAlizAtioNwheN: oCtoBer 3, 2012, 11:30Am - 6:00pm where: studeNt CeNter BAllroom, 3rd floor, 21st ANd euClid Ave .
Attendees can earn up to four hours of continuous professional education (CPE) credits
oN the AgeNdA (teNtAtive) 11:00am registration 11:30am lunch and opening remarks : •JeffreyScott,DDRCorp.andChair,ConferenceCommittee •BudSmith,VisitingRealEstateExecutive,ClevelandStateUniversity •ChenchuBathala,Chair,DepartmentofFinance,ClevelandStateUniversity •StevePercy,Dean,MonteAhujaCollegeofBusiness,ClevelandStateUniversity •RonaldBerkman,President,ClevelandStateUniversity
12:30pm - 1:30pm david oakes, CfA, Cfo and sr . executive vice president, ddr Corp . 1:30pm - 2:30pm group presentation: •JoeMarinucci,President,DowntownClevelandAlliance •GuyTotino,OwnerPolarisRealEstateEquities •JillAkins,Owner,VanAukenAkinsArchitects
2:30pm – 2:45pm Break 2:45pm – 3:45pm dr . lawrence yun, Chief economist, National Association of realtors 3:45pm – 4:45pm Nathan forbes, principal, rock gaming (owner of horseshoe Casino) 4:45pm - 6:00pm Networking reception
If you’re interested in sponsorship information, contact Katie at [email protected].
memBershippAst presideNts meet to disCuss ChANges, CoNtiNuedwere even willing to pay for the privilege. Nowadays, public companies seldom tell their stories
to local analyst societies, because they have to watch what they say and only make important
announcements through news releases, conference calls and industry conferences. For our local
Society, our best attended meetings often involve paid speakers who provide expert views on
economics, markets and strategy, instead of information specific to only one company.
Some past presidents suggested mixing up the meeting schedule with a few breakfasts or lunches
outside of downtown, noting that our membership is increasingly working in the suburbs. Most
cheered our move to the City Club, as a bright and pleasant meeting space, after the Metropolitan
Club (which some still remember as the Mid-day Club) ceased operations as a regular restaurant.
New memBership ClAssesThe CFASC Board of Directors is pleased to announce two new classes of membership, which will
6. Help clients focus on risk as much as they do on performance.
7. Disclose your educational achievements and how you improve professional competence.
8. Strive for a conflict-free business model.
9. Advocate for stronger regulations that protect investors.
10.Actwithintegrity24/7–notjustattheoffice.
“AdvOCACy IS SEttING PROFESSIONAl StANdARdS FOR MEMbERS, PROMOt-ING EtHICAl INvEStMENt INduStRy PRACtICES, IMPROvING INFORMAtION FlOwS tO INvEStORS, AdvISING POlICyMAKERS ON INvEStORS’ vIEwS, SPEAK-ING Out FOR MEMbERS ON KEy MARKEt ISSuES, ANd PROvIdING RESEARCH ANd tHOuGHt lEAdERSHIP.”
feAture ArtiClemeAsurABility promotes sustAiNABility by Arthur M. Stupay
Many corporations have well-developed statements on sustainability. Is sustainability an old
program or a new one? Are investors interested in these efforts or should they be? Are corpora-
tions committed to attaining stated goals, and can shareholders monitor results?
In “best practices” today, sustainability consists of corporate programs that benefit people
(employees and customers), planet, and profit, the so-called three Ps. Of course, successful
companies have to incorporate goals that include both customers and employees. In addition,
because it promotes efficiency and profitability, many now make efforts to reduce pollution and
increase responsible disposal. In the past decades, some companies “externalized” their waste
and pollution, and made it the concern of communities elsewhere. It is certainly positive that they
also acknowledge responsibilities to their communities and the environment.
In the past, there were few laws that penalized companies for environmental damage and shoddy
labor or manufacturing practices. This has changed and companies have included sustainable
practices in their modus operandi without notable reduction in profitability. However, some
statements on sustainability involve a dose of hypocrisy. For instance, according to one report, 37
percent of shareholders of Yum brands, the parent company of Taco Bell, KFC and Pizza Hut, voted
in favor of a resolution to use certified palm oil, which cut the use of trans-fat oils and reduced the
harm of clear cutting and burning of rain forests and peat lands. While this is positive, the fast food
industry still promotes products that contribute to widespread obesity among its customers, here
and abroad.
Also, the New York State Comptroller’s Office has secured agreements from Apple, Dell, HP and
Intel to issue sustainability reports. Yet, few of these companies have made any efforts to involve
Americans in the production of their products. They favor low cost operations in economies that are
not known for promoting employee welfare. Such companies have made little effort to balance their
sourcing with a mix of both domestic and foreign manufacturing. Is this a “sustainable” practice?
There are notable problems with the environmental practices of energy companies, but they also
issue sustainability reports. They purport to promote good energy practices, even if many have
lobbied for years against any efforts to reduce pollution and harmful practices, such as drilling in
“fragile” environments.
Continued on page 11
“IN ‘bESt PRACtICES’ tOdAy, SuStAINAbIlIty CONSIStS OF CORPORAtE PROGRAMS tHAt bENEFIt PEOPlE (EM-PlOyEES ANd CuStOMERS), PlANEt, ANd PROFIt, tHE SO-CAllEd tHREE Ps. “
feAture ArtiClemeAsurABility promotes sustAiNABility, CoNtiNuedCorporate America has come a long way from the single minded focus on profit as the only goal of
companies. Yes, profit (in one form or another, including operating or ebitda) is the prime measure
business on low cost product, no matter the source. But even their practices are changing under
the newer regime of sustainability; for instance, Walmart is now promoting the use of locally grown
organic foods in many stores.
Also, a growing number of investment funds, such as Calvert, seek companies that meet certain
environmental and social criteria. In addition, there are Christian and Islamic funds that supple-
ment financial criteria with other social and religious characteristics; for instance, many avoid any
investment in defense-related industries. But results are mixed. In theory, those companies with
the “best practices” should achieve the highest profit margins and perform well over the business
cycle, but the list is limited.
Analysts and portfolio managers trained in traditional financial theory have to seek out investible
ideas based on solid data. Thus, companies would have to show the financial benefits of using
sustainable practices. For instance, if the company purports to use alternative energy, what are
the financial costs and benefits of the practice? At that point, analysts can include the calculation
in their financial and forecasting model. Otherwise, sustainability is a practice that is part of the
operating assumptions of “best practice,” and is expected of all companies. Its absence would only
be apparent in relatively poor operating performance. In short, it is time for companies to take the
next step and measure the benefit of their sustainable practices and show how it contributes to
profitability.
“IN SHORt, It IS tIME FOR COMPANIES tO tAKE tHE NExt StEP ANd MEASuRE tHE bENEFIt OF tHEIR SuS-tAINAblE PRACtICES ANd SHOw HOw It CONtRIbutES tO PROFItAbIlIty.”
