Wednesday, March 5, 2008

Tool of the Day Report

Every day as I skim the financial news, it is inevitable that I read a story about a guy (analyst, investor, banker, you name it) who is prominent enough to be quoted in the financial news, yet is worthy of much mockery.  What amazes me about the seriousness of financial market reporting is how often the humor is overlooked.  Only Alan Abelson (one of my heroes), of Barron's is capable of consistently capturing the ludicrousness of much of the market participants.  During bull markets, everyone is a genius, or appears to be.  It is only during periods of extreme market volatility and bear markets, does the absurdity of Wall Street get exposed.  So in honor of the "credit crunch", this column will be dedicated to bestowing the title of "Tool Of The Day" on the person with the most idiotic action of the day.  The noteworthy contenders for the award are:

*Johnathan Wood of the hedge fund SRM Capital Management.  It was reported in the Deal Journal of the WSJ that he thinks Bank of America is not paying enough for Countrywide.  Let's review for a moment that Countrywide was battling bankruptcy rumors, practically taking down the FHLB as it ran out of liquidity, and taking enormous hits to the value of its portfolio due to surging defaults from all the stupid lending it did during the boom.  But this guy thinks BAC is not paying enough?  Well, perhaps his opinion is skewed by the fact that he owns 37.1 million shares of Countrywide.  Something tells me he didn't buy those shares when the stock was trading below the current bid from BAC.

*Cameron Kuhn, a major developer in Orlando and Jacksonville Florida who is having all sorts of issues including defaulting on his loans, possibly losing his own house to foreclosure, and facing lawsuits from what seems like everyone who has done business with him.  According to the Wall Street Journal Property Report, he blames the credit crunch.  That's good stuff.

But the winner of the Tool of Day award has got to be....

*Richard Shane, the analyst from Jefferies who came out with some cutting edge financial analysis today predicting that Thornburg Mortgage Inc.(TMA) had a 1 in 4 chance of going bankrupt.  He bravely slashed his rating from a buy to a sell and cut his price target from $14 to $3.75.  The stock, which was trading with a 3 handle already during the day on rumors that TMA was receiving huge margin calls, immediately dropped to $2.  Of course, the stock dropped on the real story of the day which hit the wires about a minute after the moronic analyst downgrade...that TMA's lenders were seizing collateral because they had failed to meet margin calls.   So my question to this tool is:  Is he patting himself on the back now?  Does he actually think he helped investors with his incredibly tardy downgrade after riding the stock down 80%?  Jack Grubman would be proud.  Jack Grubman, for those who don't remember, had strong buy ratings on several telecom stocks in 2001, most of which went bankrupt with the strong buy rating intact, with the exception of Worldcom, which he downgraded from a strong buy to a sell when the stock hit $1.  Jack Grubman received the Tool of the Year Award for 2002.  

1 comment:

Stephen said...

OMG I am in tears!!!!!