Newsletter gorilla resigns on SEC probe
mips1.net
By: Tim Wood
Posted: 2004/01/22 Thu 17:00 EST | © Mineweb 1997-2004
NEW YORK (Mineweb.com) -- Thom Calandra, familiar to mining investors as the man with the Midas touch for putting mining stocks into orbit, has resigned from CBSMarketWatch as the Securities and Exchange Commission investigates his trading activities.
The news was announced by MarketWatch which is conducting its own investigation. The development is badly timed for the mining sector which has been working to rehabilitate its image among general investors in the wake of Bre-X and last year’s Renaissance Mining scandal.
Calandra has an affinity for gold and mining investments that broke the mainstream financial media mould. Combined with access to MarketWatch’s vast audience, Calandra achieved enormous market power.
As his regular columns highlighting individual stocks gained clout, especially with rising metal prices, a subscription newsletter seemed likely. It became inevitable when MarketWatch acquired Hulbert Financial Digest (HFD), a publication that tracks and analyzes investment newsletters. Calandra’s work increasingly drew on the newsletters HFD reviewed.
Even though the Calandra Report often recycled tidbits from newsletters already in circulation, its huge audience made it the 800 pound gorilla in the hard fought newsletter world, and it gained a reputation as the stock mover.
That also made it attractive to companies who saw financing opportunities for the taking if they could get a mention. Many believe Calandra became too close to some companies, to the point that he promoted them at conferences as if on their payroll. His enthusiasm for those companies was boundless; if not reckless since he boasted about his scalps.
He was called out for it in a Forbes article which hammered him as a shill for Ivanhoe.
Calandra never made a secret that he was trading the stocks he wrote about – nothing unusual for newsletter writers. So the launch of an investigation is in itself unusual although Calandra’s profile perhaps made him a natural target. Nevertheless, the fact that MarketWatch has cancelled the newsletter and is refunding subscribers speaks volumes even before a final verdict is delivered.
Perusing stock boards shows that Calandra made many enemies with the manner in which he pulled stocks from his list of picks. Doubtless that was the source of many complaints. The action surrounding Crystallex [KRY] last year is typical – Calandra punted it as an inevitable take out by a senior gold stock. The reports repeatedly buttressed that storyline until an abrupt volte face when Calandra said a feasibility study for the Las Cristinas project had turned him off. The switch from selling a trend to dumping an engineering report stood out like a sore thumb.
The Calandra Report was unusual for being a paid subscription service embedded in a conventional financial publication. It was even more unusual that Calandra was promoting his newsletter from his regular column giving him an unusual privilege at MarketWatch which has strict rules to avoid conflicts of interest. Those rules are being tightened, albeit it too late; it echoes moves across the financial reporting industry.
Mineweb, which is almost as old as MarketWatch, instituted tough rules regarding trading and disclosure (scroll to bottom of link) for its staff from inception.
Calandra is one of the most experienced accomplished financial journalists with a proven business brain through the success of MarketWatch. We would be surprised if he is guilty of anything more than lapsed judgement and having too much faith in people who picked him off as a sales opportunity.
Calandra's attorney, Dana Welch, returned a call requesting comment, but had nothing to add to the statement on MarketWatch.
MarketWatch [MKTW] fell 9.4%, or $1.03 today. The stock dived to a low of $9.30 shortly after the news was announced and after Calandra reportedly failed to meet a deadline to turn over trading records to the company. |
