Calling Out Poor Research on Calpine
The analyst community is getting grilled in front of Congress today, and they are looking sleazy. Here's an article on a similar situation on what may become the next Enron in the energy sector:
thestreet.com
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Calling Out Poor Research on Calpine
By James J. Cramer
02/27/2002 03:29 PM EST
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:NYSE - news -
commentary - research - analysis). 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! |
