Another McKinsey client bites the dust

I think this would be a very successful shorting strategy for stocks - find out who McK is advising and buy very long-dated puts (I say this as a former McK summer intern where I did case studies on Enron as the outperforming strategic company...)

And these days it's relatively easy to find out via LinkedIn which companies have McK alumni…

So on AMR:

http://dealbook.nytimes.com/2011/11/29/american-airlines-parent-files-for-bankruptcy/

Practice Case 42: American Airlines (Mckinsey - Round 2)

Guess who was on AMR board...

McKinsey's global head
Gupta was global head of McKinsey for nine years until he retired in 2007. He won a seat on the board of directors of powerful Wall Street bank Goldman in 2006 and left in May 2010, seven months after Rajaratnam's arrest. He was also a director at P&G and American Airlines Corp.

Of course, nothing is wrong with the strategy and strategic advice, it's always the execution that's wrong...

This is a nice summary - UBS is missing from the list (McK advised UBS on getting into structured credit):

http://www.ritholtz.com/blog/2011/03/is-mckinsey-co-the-root-of-all-evil/

• Advocating side pockets and off balance sheet accounting to Enron, it became known as “the firm that built Enron” (Guardian, BusinessWeek)

• Argued that NY was losing Derivative business to London, and should more aggressively pursue derivative underwriting  (Investment Dealers’ Digest)

• General Electric lost over $1 billion after following McKinsey’s advice in 2007 — just before the financial crisis hit. (The Ledger)

• Advising AT&T (Bell Labs invented cellphones) that there wasn’t much future to mobile phones (WaPo)

• Allstate reduced legitimate Auto claims payouts in a McK&Co strategem (Bloomberg, CNN NLB)

• Swissair went into bankruptcy after implementing a McKinsey strategy (BusinessWeek)

• British railway company Railtrack was advised to “reduce spending on infrastructure” — leading to a number of fatal accidents, and a subsequent collapse of Railtrack. (Property Week, the Independent)