Colby Howard

Published on June 12, 2023


Featured Article

Leveraging F.L.A.G. Data: Exposing Executive Risk for Investors

Introduction

In the realm of hedge funds and asset management, accessing reliable and comprehensive data is paramount. Paragon Intel, a leading provider of proprietary datasets, offers a groundbreaking tool known as flag data.

This data encompasses financial, legal, audit, and governance risks, allowing stakeholders to evaluate an executive’s career trajectory. By scrutinizing historical late filings, material impairments, shareholder litigation, illegal activities litigation, and regulatory actions throughout an executive’s tenure, hedge fund analysts can make informed decisions when new executives join a company. This post delves into a recent case involving Moderna, shedding light on the pivotal role played by Paragon Intel’s F.L.A.G. data and its implications for the industry.

The Moderna Case Study:

Moderna, a renowned pharmaceutical company, announced the appointment of Jorge Gomez as its new CFO on April 11, 2022. While the effective hiring date was set for May 9, 2022, Paragon Intel swiftly added Gomez to their platform, offering their clients an opportunity to evaluate his background. This case presents a compelling example of how flag data played a crucial role in assessing executive risk and uncovering worrisome patterns in Gomez’s previous roles as CFO at Dentsply Sirona and Cardinal Health.

Revealing Red Flags:

Paragon Intel’s platform unveiled a troubling history associated with Gomez’s performance as CFO. From 2018 to 2022, the companies he was associated with experienced significant material impairments. Furthermore, instances of late filings were identified at Dentsply Sirona in 2019 and 2022. By accessing the flagged data through Paragon Intel, clients gained critical insights into these issues, underscoring the presence of substantial risk factors.

Discrepancies in Information:

It became evident that Moderna lacked access to the same information available through Paragon Intel’s platform. Astonishingly, on the day of Gomez’s official hiring, May 9th, he was swiftly terminated due to allegations concerning financial reporting matters at his previous companies. This incident highlights two significant insights for hedge fund analysts and asset managers alike.

Key Insights:

Firstly, investors and users of Paragon Intel’s platform possessed critical information about an executive hire a month ahead of the company’s realization, emphasizing the importance of comprehensive datasets in risk assessment and decision-making. Secondly, Moderna’s oversight of Gomez’s flagged data raises concerns about their ability to attract high-quality CFOs in the future, prompting questions regarding the company’s standards for CFO hires.

Performance Indicators:

In addition to the red flags unearthed through Paragon Intel’s platform, Gomez’s career alpha of -110% further amplifies doubts surrounding his competence as a CFO. During his tenure, Cardinal Health underperformed the market by 40 percentage points, while Dentsply Sirona underperformed by nearly 80 percentage points. This history of working at underperforming companies and encountering financial reporting issues further compounds concerns about Gomez’s capabilities and raises questions about Moderna’s evaluation processes.

Conclusion:

The Moderna CFO hiring incident serves as a compelling case study for hedge fund analysts and asset managers, emphasizing the pivotal role of flag data in executive risk assessment. Paragon Intel’s comprehensive datasets empower analysts with vital information, enabling them to make well-informed decisions and mitigate potential risks. This episode underscores the importance of leveraging cutting-edge tools and conducting thorough due diligence to safeguard investments and ensure the recruitment of top-tier talent for critical executive positions within the hedge fund industry and asset management sector.

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