Calling Out Poor Research on Calpine
By James J. Cramer
02/27/2002 15:29
--------------------------------------------------------------------------------
When people talk about "bad" Wall Street research, they aren't just talking about research on Enron . One stock that has buried more of our readers than just about any other that I have come across is Calpine CPN . And one of the chief capital shredders is Neil Stein from Credit Suisse First Boston.
I don't know Stein from Adam. He must have gotten into the business after I left, or was covering stuff I didn't care about when I was at Cramer Berkowitz.
But our readers have been crushed by his calls, and I think it is important to point out that throughout this hideous downturn in Calpine, Stein has reiterated his strong buy. All the way down. Even as he has cut his target price repeatedly.
When I read this horror story, I said to myself, "Bet CSFB was the underwriter." Sure enough, when I checked who did Calpine's four deals in the last six years, Credit Suisse was the underwriter for all of them.
To read through a year's worth of this guy's research would make you feel like he was just completely in the pocket of management.
Which brings me to the point: I can handle how wrong Stein was, even though I am surprised he hasn't been drummed out of the biz yet. What bothers me is that the most important piece of information in all of Stein's bullish missives, the single most salient point, was buried at the end of every piece in a language that was meaningless, in a typeface that is hard for this old guy's eyes to see: "Credit Suisse First Boston Corporation may have, within the last three years, served as a manager or co-manager of a public offering of securities for" Calpine.
Here's a cure for all of this: You slap Stein's stuff with a big red stamp at the top that says "We are Calpine's banker."
Then I would feel as if we knew what we needed to know about this unrigorous hack's work. We could make an informed judgment.
And we would all do much better in the end. Even Stein! I'd be praising him for his honesty and subservience to his most important clients rather than criticizing him!
Hoo-hah! |
