If you were getting your market NEWS buzz on today then you may have seen the most recent cover of FORTUNE magazine unveiled on the CNBC Squawk Box this morning PROMINENTLY featuring Oppenheimer & Co. 'Star Analyst' Meredith Whitney looking VERY wealthy, VERY smart and VERY beautifully & powerfully attractive while she dutifully points out that the ECONOMY is headed for 'DEEP RECESSION' (as in the BOTTOM of the DUMPSTER). And this gorgeous bear REALLY KNOWS HER STUFF & she is STRUTTING it after having written about Citigroup (stock ticker symbol, C), in Oct. of 2007, basically telling the world that they would have to CUT the dividend ... which, it turns out, Citigroup DID do as did OTHERS (National City, NCC, among them). It was a prediction that, at the time, STUNNED many in the financial world, and since her prediction turned out to be 100 PERCENT ACCURATE, well, she got the Big Hot Spotlight turned towards her, and now she continues to BASK (if even uncomfortably) in that BIG HOT SPOTLIGHT. Just don't try to give Meredith ANY S**T because THIS PIC is of HER HUSBAND John "Bradshaw" Layfield who is the, uhm, LONGEST reigning WORLD CHAMPION of 'SMACKDOWN' HISTORY (yes THAT SmackDown as in World Wrestling Entertainment (WWE) previously known as World Wrestling Federation (WWF)) ... yup, Wall Street's current FAVORITE HOT FEMALE ANALYST is married to ... appropriately enough ... THE SMACKDOWN KING!
Like the internet days when we had superstar analysts (Henry Blodget anyone?), we now have the new market guru of the financials arena in Meredith Whitney.
ReplyDeleteShe’s undoubtedly made some prescient calls and hasn’t been shy in making them aggressively and in an outspoken manner, but the question really is whether Meredith Whitney is more sizzle than steak?
When you look at her performance as reported in a Fortune Magazine article of August 18, 2008, it is average or even below average. “Based on the performance of her buy and sell recommendations relative to her industry peer group Whitney’s stock picking ranked 1,205th out of 1,919 equity analysts last year and 919th out of 1,917 through the first half of 2008.”
However, given the love affair with Meredith Whitney, the article goes onto assert that “evaluating Whitney solely on the timing of her buys and sells misses the point” is one of the most patently ridiculous things I’ve ever read. It doesn’t miss the point. It is the point.
If I’m a client or investor, I’m guessing that the correctness of stock picks is what makes me money and not the “brutality of her arguments and the evidence she summons in making them.” Looking at her stock picks as a metric for measurement is the right thing, and no matter how good her arguments sound, her stock picks aren’t that good.
However, we all love a story and Meredith Whitney provides it. She is married to a WWE wrestler and more importantly, she makes swing for the fences calls which attract attention. If she was wrong on these big crazy calls, she’d have faded into obscurity. But because she has been right on some of these big, hairy prognostications, she’s been appointed a guru and CEOs and CFOs spend time with her.
Unfortunately, it seems the frequency of being right which I presume the folks who are ranked highly in the equity analyst ratings are is being drowned out by the magnitude of correctness and slick PR.
Let’s remember the primary objective of an equity analyst should be to make good calls that inform clients’ investment actions and enable their success. As a result of this, they should be rewarded. Somehow, being 919 out of 1917 equity analysts doesn’t seem worthy of much praise, but once again, style sells.
The question now is if Meredith Whitney’s stock picking skills don’t improve, how long will the hype last?
Regards,
Anand
Brilliont
Investile Dysfunction blog