Did the fine folks of this board read the article in Newsweek on "Sherlocks of Finance," in which Adrian du Plessis is profiled. It is worth reading.
This guy Schilit sounds like an unbelievably profitable source of shorts. His newsletter costs $10,000 per year though, ouch. However, if ten people ponied up a grand each, we could put each recommendation through a ten-person ringer, whittling his picks down the best two or three, and short the living bejesus out of them. We could name our little coterie, "Full of Schilit."
"Howard Schilit hunts bigger prey than YBM, dissecting financial statements from blue-chip companies like United Health Care, 3M and Oxford Health Plans. Unlike du Plessis, he's not looking for outright fraud; rather, he identifies "early signs of operational deterioration," particularly by zeroing in on aggressive accounting moves that might camouflage a sagging business. Although Schilit, like du Plessis, doesn't buy or sell stocks based on his research, his efforts are explicitly designed to aid investors. His clientele of institutional investors -- a third of them short-sellers, who bet on stocks to fall -- pays more than $10,000 a year for Schilit's monthly newsletter on companies with questionable accounting. Showing up on that list usually foretells trouble: the average stock price of the companies Schilit highlighted in the last year is down 26 percent. "Howard identifies problems that conventional Wall Street analysts don't pick up on," says one hedge-fund manager. Although most companies quietly weather Schilit's criticism, a few emerge to become full-fledged scandals. "Sometimes when you see unusual accounting, that may be the tip of the ice-berg," he says."
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