atans1

Iceberg crushes Noble House into dust

In Accounting, Commodities, Corporate governance on 07/06/2016 at 1:17 pm

I’ve been thinking of buying Noble House but am still concerned that the accounting issues surrounding the long-term supply contracts could resurface, They’ve not gone away. Maybe the rights issue prospectus can help.

As a reader commented on FT

The only winner in this mess is Iceberg. They nailed it 18 months ago. They were right. They still are right. Their analysis was excellent and everyone who lost money, and that was everyone should be kicking themselves for not heeding their advice.

Btw, the reader remains sceptical that the underwriters will do due diligence on the accouting issues. I suspect he’s right.

Under the just departed CEO, Noble made small investments in commodity producers to secure marketing and supply rights, in some cases for as long as 20 years.

Noble’s  team of quantitative analysts designed structured trades and business models involving long-term commodity contracts.

Critics have said the company booked profits upfront on some of the contracts, which were based on overly optimistic assumptions about commodity prices. Noble has defended its accounting policies, and board-appointed consultants PricewaterhouseCoopers found it had complied with international accounting rules. Err so did Enron, Global Crossing etc. Their accounts were approved by the big four accounting forms, one of which is Pricewaterhouse.

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