Would You Trust The Corporate Executive Board?

There's no doubt that if you had to give out an award for the most boring name for a publicly traded company, the Corporate Executive Board (NASD: EXBD) would win hands down.  I've always felt though that it would be awesome to be on the company's executive board, just so that you could say that you're on the "executive board of the Corporate Executive Board".

Its name notwithstanding, the company is getting slammed today for delivering disappoint guidance.  Apparently, the company's business of providing high level consulting to other companies in areas like HR and finance aren't doing so well.   Then again, why should you trust the Corporate Executive Board on these matters? 

Just take a look at the company's own recent track record.   

Start by checking out the insider trading at the company from last March, when the stock was trading near 100.  Insiders were selling like mad.  With a PE of 55 at the time, the insiders rightly sensed that the stock might be near a peak.  That's ok though, insiders are allowed to sell their stock if they think it's overvalued.  What's not so cool is that just a couple of quarters later, the company started doing massive buybacks, which you can see by trawling through their SEC filings at the time.  So the insiders, when making decisions with their own money, knew to sell.  But with the shareholders money, they were buying.

And what's been the result of this activity?  The company has destroyed shareholder equity while reducing overall sharecount by a whopping 3%.

So, if you were the CFO of a public company, would you want the advice of the Corporate Executive Board?

Comments

[kath2225]

You are misleading on so many counts, it’s really sad.

First off, you don’t have to trawl through SEC fillings to know the company has been buying back stock: they talk about it on conference calls every quarter that it happens. They have been doing it for the last two years. This isn’t news.

Second, you didn’t put up a five-year chart of EXBD against the market. If you had invested in EXBD then, you’d still be well ahead today.

Third, the company’s growth rate is still above that of its peer group and many of those in the market. Period.

Fourth, investing is a long-term thing. If you have a one-year time horizon, stick to a money market account or a CD. Stocks can take a beating, get over it.

That said, you are right on one thing, EXBD does have a pretty boring name.