But while you're waiting on Spitzer, here's something from a good friend of his...
Irony Strikes Companies Crying Collusion
By James J. Cramer
01/24/2003 01:47 PM EST
Say it ain't so -- Alice Schroeder must be in on it, too! Morgan Stanley's analyst must be part of the nefarious ring of short-sellers that is targeting MBIA (MBI:NYSE - news - commentary - research - analysis)! Amazing!
Why else would she have taken the stock from a hold to a sell today? It can't be because she is worried about the fundamentals. No way, she must be in on it. Get the subpoenas ready! We have to find out whether Schroeder and her "research" colleague in arms, Vinay Saqi, may have read the now-disgraced Gotham Partners' negative piece on MBIA before they pulled the trigger on their downgrade. That would make it a conspiracy of major proportions, the likes of which the 1934 Securities and Exchange Act had to be meant to protect!
OK, I am being a tad facetious. But there is some delicious irony in today's downgrade of MBIA by Morgan Stanley. The woes that Morgan Stanley forecast are identical to the woes flagged by Gotham Partners when they were shorting and bashing. In fact, I think Gotham's work was no better or worse than Morgan's, and had the added advantage of being earlier. (And irony of ironies, take a look at how Gotham target Farmer Mac (AGM:NYSE - news - commentary - research - analysis) is doing after that miserable quarter telegraphed by the hedge fund! At one point, that stock was indicated down $10 for precisely what Gotham flagged, although in retrospect, Gotham was too easy on them.)
Let's understand each other: The regulators should be endorsing and embracing critical research, whether from longs or shorts, given the horrid losses generated by the over-the-top bulls. They should recognize and preserve the right of anyone -- long, short, fat, thin, rich, poor -- to say negative things. If the negative things are wrong, it will be a great buying opportunity. If they are right, then they have flagged us ahead of the Morgan Stanleys, and we should be thankful. The notion that they should be chilled because a couple of thin-skinned companies don't like what they say and want the government to do their bidding is farcical. Big bad hedge funds are ganging up on little old companies -- give me a break!
If these companies are so distraught, they ought to focus on their businesses, do well, and crush the short-sellers the best way possible, with the fundamentals. They shouldn't be running to the attorney general's office the way a teased kid runs to his mother. I would be embarrassed if I were a complaining executive at MBIA after I read this Morgan report. What could be the motivation of Alice Schroeder to downgrade MBIA other than a legitimate worry, first articulated by Gotham, about MBIA's leverage and guarantees?
No, I am not giving a free pass to Gotham. I am embarrassed that they hyped Pre-Paid Legal (PPD:NYSE - news - commentary - research - analysis) and blew stock out when they did, and I want to know for a fact whether they knew they could have predicted a capital call. Judging by The New York Times article from last Sunday, you would have had to be a moron not to think they were going to have a capital call.
But, so be it. It is what it is. I think Gotham should be investigated for Pre-Paid because some of our readers might have bought the stock after reading Gotham's glowing report and must feel fooled. That's a legitimate complaint. (As opposed to someone who might have shorted MBIA after Gotham's blast and then been unhappy when it didn't go down.)
If the regulators want to have critical research -- the fundament of the global settlement -- they better get used to where it could come from. Sometimes it will come from the Morgans, but mostly it will come from the people who are motivated to win if stocks go down. That's just capitalism.
So here's to irony. And let's see if the lawyers for MBIA and Allied Capital (ALD:NYSE - news - commentary - research - analysis) and Farmer Mac -- I am told that some of these companies have the same lawyers -- now go after Morgan for colluding! Good luck -- you'll need it. |
