Winning at Active Management

Appendix C Feathered Feast: A Case

At the time this article was published, its author, Jack L. Treynor was President of Treynor Capital Management, Inc. in Palos Verdes Estates, California, and a member of the editorial board of the Financial Analysts Journal, in which this piece originally appeared.

Feathered Feast: A Case

Jack L. Treynor, Financial Analysts Journal, November/December 1993.

Feathered Feast is a case about disclosure—about the relation between the reporting accountant and the outside user and about the framework within which these professionals perform mutually complementary roles. Like all cases, it confers little or no insight on those who merely read it. Rather, one has to live the case—to feel the frustration and anguish of the protagonist, Shepard Saunders.

Feathered Feast Inc. (III)

In May 1993, Shepard Saunders, manager of the Amalgamated Iceman’s Pension Fund, was reviewing certain purchases that, in retrospect, had not worked out as successfully as he had originally hoped. Among these was Feathered Feast, Inc., purchased for the fund in December 1991.

Feathered Feast, Inc. (FF) was at that time one of a number of rapidly growing fast-food chains specializing in fried chicken. FF was distinguished by the fact that, instead of selling franchises, it retained complete control of all FF retail outlets, owning them outright. Management argued that outright ownership gave them better control over the quality of the final product. But outright ownership, ...