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The case describes the investment of hedge fund, Totem Point Management in Analog Semiconductors (ADI) as a way to discuss forecasting and valuation in growth companies. In June 2016, hedge fund Totem Point invested in ADI at around $55 a share. In general, Totem Point aimed for their investments to yield 50 percent returns over a two-year time horizon. It was now 2018, and Totem Point was evaluating whether to maintain its position in ADI, expand it, or close it and walk away with its (substantial) winnings from the investment. Though the stock had done well in the prior two years, it had recently seen numerous downgrades by sell-side analysts, as its price slid 15 percent from a historic high. The question facing Totem Point, was whether it would grow by a further 50 percent over the next two years. To answer this question, Totem Point considered growth trends in each of ADI's main end-markets: industrial applications, consumer applications, automotive applications, and telecommunications applications. If these end-markets expanded over the coming two years, ADI would do very well, but if they failed to expand, the stock would stagnate. Totem Point's task was to figure out which scenario was most likely and what that scenario would mean for the stock's price.

Supplement to case 118044.

China Resources expresses disagreement over the validity of the results of the board vote as announced by China Vanke. It further raises objections to Vanke's handling of the announcement as well as reiterates its doubts about the strategic rationale of the proposed transaction.

Baoneng calls for the removal of China Vanke's board of directors, citing as reasons the directors' mishandling of the Shenzhen Metro proposal as well as the company's various breaches of corporate governance requirements. Vanke defends itself against Baoneng's allegations, and also responds to the Shenzhen bourse's inquiries regarding the validity of the board vote.

In the battle for control over China Vanke, the Chinese securities regulator steps in to censure Vanke and Baoneng for acting against the interests of the market and minority shareholders. The Chinese insurance regulator also finds Baoneng to be in violation of insurance regulations, and subjects its insurance arm to severe restrictions on further sales of its products. A rival private property developer, China Evergrande, also joins the fray, buying enough shares to become Vanke's third largest shareholder. The case finally relays how the battle for control winds down and the eventual resolution.

Some experts argue that corporate leaders are starving their firms of investment capital by making excessive payouts to shareholders, thereby undermining innovation, employment opportunity, and economic growth. As evidence, they point to S&P 500 firms' using 96% of their net income for repurchases and dividends. A closer look at the data shows that the amounts going to shareholders at the expense of internal investment are less than claimed. The problem lies in the ratio used--shareholder payouts as a percentage of net income--which fails to take into account offsetting equity issuances as well as actual R&D expenditures. The percentage of income potentially available for investment that goes to shareholders is not 96% but a much more modest 41%. After paying shareholders, S&P 500 firms are at near-peak levels of investment and have huge stockpiles of cash for exploiting future opportunities. There may well be severe corporate governance problems in the S&P 500, but the data suggests that excessive shareholder payouts is not one of them.

This case highlights the business challenges associated with a financial technology firm, New Constructs, that created a technology that can quickly parse complicated public firm financials to paint a clearer economic picture of firms, remove accounting distortions, and aid investment analyses. Combining machine learning with human financial analysts, this technology automated the collection and classification of comprehensive quantitative data from annual (10-Ks) and quarterly reports (10-Qs). The technology parsed information from the face of the financials and from disclosures in the management discussion and analysis or the footnotes sections to the financial statements (e.g., gains and losses that are transitory in nature or off-balance-sheet liabilities like future operating lease payments). Using these data, New Constructs applied a set of transparent and clearly-defined adjustments to a firm's income statement and balance sheet to create alternative measures of its sustainable operating profits, invested capital, and return on invested capital. This case highlights the complexity of financial disclosures in 10-Ks and 10-Qs and how machine learning and human analysts can work together to improve the quality of investment research. This case also highlights how analysts may adjust income statements and balance sheets to understand firm performance better or facilitate forecasting. However, could the CEO of New Constructs convince market participants of the technology's (and the data's) value? What else could the company do to establish a toehold in an increasingly competitive market for financial and alternative databases?

In October 2016, Tesla asked its shareholders to ratify their $2.4 billion bid for SolarCity. Tesla had announced a series of large projects in the preceding months including the unveiling of the Model 3, the new Solar Roof, and pushing forward the opening of the Gigafactory. All of these projects required high upfront costs, and with SolarCity's debt burden, investors were left questioning whether the acquisition imposes too much financial risk on Tesla as well as the motives behind the move. Weeks prior to the merger, Tesla released its third-quarter financials, which reported record-breaking deliveries, GAAP profits (for the second time in the company's history) of $22 million, and positive free cash flow of $176 million. With Wall Street expecting a loss, these results came as a shock. Yet, questions remained regarding the quality of these earnings, which benefitted from the company's sales of zero emission vehicle tax credits and the cancellation of its resale value guarantee program. With the ISS backing Tesla's merger proposal in the days leading up to the final vote, institutional investors and shareholders wondered whether they should vote for or against the deal.

Japan's corporate culture has traditionally prioritized the interests of stakeholders such as customers, employees, and suppliers over those of shareholders. After a decades-long economic slump, Japan's government has revitalized efforts to improve corporate governance in the country's public firms and to elevate public firms' incentives to engage with shareholders. Misaki Capital was founded in 2013 with a strategy of constructively engaging with portfolio firms, providing operational and financial advice to management to improve enterprise and shareholder value. This case asks students to consider the attractiveness of Japanese equities given recent reforms and to evaluate Misaki Capital's constructive investment approach. Students will evaluate how corporate governance in Japan is connected to public firms' market valuations and how elevating shareholders' de facto rights could improve firm performance and valuations. Which of Misaki's recommendations should Sangetsu Corporation pursue? How do they create value?

Update on Alibaba Group's share price performance and related events in the year following its September 2014 IPO.

This case centers around the Air Products' hostile takeover attempt of Airgas in 2010. Air Products argued that its offer of a 38% premium is generous given Airgas' poor performance, which Air Products attributed to underperforming and entrenched managers at Airgas. On the other hand, Airgas' management argued that the company's recent struggles are cyclical and that Air Products' offer grossly undervalues Airgas' long-run potential. How might Airgas' management credibly communicate its conviction to shareholders? Should Airgas shareholders side with Air Products and accept a certain short term return, or should they side with Airgas' management and accept an uncertain but potentially higher long-term outcome? How should the Airgas board balance its responsibilities to short-term versus long-term shareholders?

In 2014 Alibaba debuted on the New York Stock Exchange, creating not only the largest IPO in history but this initial desire to list on the Hong Kong Stock Exchange was denied due to the company's desire to preserve its partner's control over decision rights. Why did Hong Kong deny Alibaba's requests to list dual-class shares or to allow its partners to nominate a majority of the board of directors, and in the process turn away a superstar in Alibaba? Why did American stock markets approve of Alibaba's governance structures, despite the warnings of many governance experts? How can investors ensure that their capital would be deployed effectively by the company's top management?

This case centers around the shareholder dispute between three major shareholders of Turkcell, and how its management vied against increasing regulatory intervention and market competition in the absence of a fully-functioning board. The battle for control of the Turkish telecom giant led to several years in which the company could not hold annual shareholder meetings, renew its board of directors, or pay dividends, and lacked a board-approved operating budget. Nevertheless, it maintained its majority market share and was the only telecom player with positive EBITDA in the market. What were the implications of this dispute for Turkcell's broad ambitions? How would the continuing battle affect management, talent, and the company's financial performance?