Value Line, Inc. is a

publicly traded A public company is a company whose ownership is organized via shares of share capital, stock which are intended to be freely traded on a stock exchange or in over-the-counter (finance), over-the-counter markets. A public (publicly traded) co ...

investment research and financial publishing firm based in

New York City New York, often called New York City (NYC), is the most populous city in the United States, located at the southern tip of New York State on one of the world's largest natural harbors. The city comprises five boroughs, each coextensive w ...

. Founded in 1931 by Arnold Bernhard, Value Line is best known for publishing ''The Value Line Investment Survey'', a stock analysis newsletter that tracks approximately 1,700 publicly traded stocks.

History

The "Value Line" was a line representing a multiple of cash flow that Bernhard would visually "fit" or superimpose over a price chart. This was a pioneering attempt to normalize the value of different companies. He soon began publishing his investment survey. Bernhard published ''The Evaluation of Common Stocks'' in 1959. In 1946 Bernhard hired Samuel Eisenstadt as a proofreader, a graduate of

Baruch College Baruch College (officially the Bernard M. Baruch College) is a public college in New York City, United States. It is a constituent college of the City University of New York system. Named for financier and statesman Bernard M. Baruch, the colle ...

who majored in statistics. In 1965 Eisenstadt convinced Bernhard to use a statistical method called

ordinary least squares In statistics, ordinary least squares (OLS) is a type of linear least squares method for choosing the unknown parameters in a linear regression In statistics, linear regression is a statistical model, model that estimates the relationship ...

(OLS) regression analysis to replace Bernhard's visual method of fitting cash flow to a price chart. Using scores of

Monroe Monroe or Monroes may refer to: People and fictional characters * Monroe (surname) * Monroe (given name) * James Monroe, 5th President of the United States * Marilyn Monroe, actress and model Places United States * Monroe, Arkansas, an unincorp ...

mechanical calculators A mechanical calculator, or calculating machine, is a mechanical device used to perform the basic operations of arithmetic automatically, or a simulation like an analog computer or a slide rule. Most mechanical calculators were comparable in si ...

and a handful of data operators, Bernhard and Eisenstadt produced a stock picking system that caught the attention of academic

Fischer Black Fischer Sheffey Black (January 11, 1938 – August 30, 1995) was an American economist, best known as one of the authors of the Black–Scholes equation. Working variously at the University of Chicago, the Massachusetts Institute of Technology, ...

of the

University of Chicago The University of Chicago (UChicago, Chicago, or UChi) is a Private university, private research university in Chicago, Illinois, United States. Its main campus is in the Hyde Park, Chicago, Hyde Park neighborhood on Chicago's South Side, Chic ...

. Black published an article in the ''

Financial Analysts Journal The ''Financial Analysts Journal'' is a quarterly peer-reviewed academic journal covering investment management, published by Routledge on behalf of the CFA Institute. It was established in 1945 and , the editor-in-chief is William N. Goetzmann. ...

'', "Yes, Virginia, There Is Hope: Tests of the Value Line Ranking System" in 1973. The system came to be known as the "Value Line Ranking System for Timeliness". With Eisenstadt on board, Bernhard continued to expand the business, adding the other publications and mutual funds along the way. In May 1983, Value Line sold stock for the public for the first time (), though the Bernhard family retained 80% control. Bernhard died in December 1987, but until his death, Bernhard continued his literary interests by combining with W. H. Auden, Jacques Barzun and Lionel Trilling in founding the Mid-Century Book Society. Shortly after his death, his daughter, Jean Buttner, was named

CEO A chief executive officer (CEO), also known as a chief executive or managing director, is the top-ranking corporate officer charged with the management of an organization, usually a company or a nonprofit organization. CEOs find roles in variou ...

of Value Line.

Fraud case

Fraud was uncovered by the Securities and Exchange Commission (SEC) in November 2009. The fraud, which spanned nearly 20 years and involved over $24 million, was committed by Value Line against its mutual fund shareholders. The fraud was first reported to the SEC in 2004 by the then Value Line Fund () portfolio manager and Chief Quantitative Strategist, John (Jack) Dempsey of Easton, Connecticut, who was required to sign a Code of Business Ethics as required by the Sarbanes-Oxley Act. Restitution totaling $34 million was placed in a fair fund and returned to the affected Value Line mutual fund investors. The Commission ordered Value Line to pay a total of $43,705,765 in disgorgement, prejudgment interest and civil penalty, and ordered CEO Jean Buttner and COO David Henigson to pay civil penalties of $1,000,000 and $250,000, respectively. The Commission further imposed officer and director bars and brokerdealer, investment adviser, and investment company associational bars (“Associational Bars”) against Buttner and Henigson. No criminal charges were filed.

References

{{Reflist, 2

External links

*http://www.valueline.com/About/History.aspx *http://www.crainsnewyork.com/article/20091207/FREE/912079992 *http://www.marketwatch.com/story/more-lumps-of-coal-for-naughty-mutual-funds-2009-12-20 *http://www1.excite.com/home/careers/company_profile/0,15623,182,00.html *http://www.crainsnewyork.com/article/20091129/FREE/311299993 Investment management companies of the United States Financial economics Companies listed on the Nasdaq American companies established in 1931 Financial services companies established in 1931

History

Fraud case

See also

References

External links