JJ/SSB Is Becoming a Celebrity ??
Street.com exposes SSB analyst Joseph
by: SEMI_LONG 7/14/00 9:17 pm
Msg: 14713 of 14717
Salomon Analyst's Negative Report Buried by Semiconductor Bulls
By Joe Bousquin
Staff Reporter
7/14/00 8:39 PM ET
Today you're Henry Blodget. But tomorrow? Rodney Dangerfield, perhaps.
Jonathan Joseph, a Salomon Smith Barney analyst, knows the feeling. He managed to rally long-dormant semiconductor bears with a July 5 call to arms that drove the industry's leading index down 9.3%. Amid potshots from rival firms, Joseph managed for one day to galvanize investors with a contrarian report citing a host of industry-specific and macroeconomic factors.
But the pendulum swung back on Joseph with stunning speed, as the chip stocks bounced back 4.5% the next day. Ironically, driving the rally was a big bullish bet on the semiconductor industry -- placed by the trading desk at none other than Joseph's firm, Salomon Smith Barney.
It's unclear whether that trade -- covering some $56 million worth of the Merrill Lynch Semiconductor HOLDRs, a security that tracks the semiconductor stocks -- was executed for Salomon or for a client. But someone, either within the firm or at one of its clients, made a multimillion bet against Joseph's view.
"Someone said this call is bunk," says a West Coast hedge fund trader who watched the trade post. "The irony is where the trade was executed."
Salomon declined to comment, except to say Salomon is "the leader in trading semiconductor stocks. Market participants recognize and appreciate this when deciding who should execute their trades."
Big Swing
In his July 5 call, Joseph cut the chip sector to neutral from outperform, pointing to higher inventories, softer prices and a spike in spending as possible signs of a top. In the note, he cut his ratings on Advanced Micro Devices, National Semiconductor, Silicon Storage Technology and Texas Instruments. (Of those companies, Solly has performed recent underwriting for Advanced Micro and Silicon Storage.)
The note flew in the face of months of bullish sentiment on chips and took the air out of semiconductor stocks, which had surged 66% since the beginning of the year.
The next day, analysts at other firms predictably took exception, mocking Joseph's thesis in their reports like, "End of the Cycle? We Don't Think So." Firms such as J.P. Morgan and ABN Amro rebutted the analyst's
comments.
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