Barry Dunaway, vice president and senior securities analyst of KPM Investment Management in Omaha, shares the view held by a number of investment specialists: Don't assume the managers, directors and auditors of companies, or even Wall Street analysts and portfolio managers, will be able to help you determine whether the people who run a company are honest.
"As an investor you can't necessarily depend on the experts because they have their own ax to grind, their own institutional constraints," he
"I don't think people will learn anything from (the Enron
and Inacom situations).There is still a gambler's mentality. (Investors) think they get a bad break once in a while.What they should do is ask themselves: 'Do I know how to analyze financial statements?'
"If they can't, they need to find someone they trust to do it for them."
Judging the character of corporate leadership simply by the big names the company has on its board also isn't recommended, Dunaway
pointed to the example of a short-lived Omaha company called Normandy America Inc.
whose board members included Peter V. Ueberroth, former commissioner of baseball; William H. McCartney, former director of insurance for Nebraska; and Myron Du Bain, retired chairman and chief executive of Fireman's Fund Corp.