Don't Screw With Meredith Whitney....Just Don't Do It.

Meredith Whitney was featured in Fortune Magazine this week where she gave what she has been giving for at least a year now.  A frank and sober assessment of how screwed our financial system is.  According to Fortune's interview with Ms. Whitney;

"I do not think we are near the end of write-downs," she tells Fortune, "so I continue to see capital levels going lower, capital raises diluting existing shares further, and stocks going lower."

Unfortunately, we whole-heartedly agree.

My favorite part of Fortunes article was this;   

"Whitney's critics, and there are many among bankers and analysts, contend her bearishness at this point shows she simply doesn't now how to measure the remaining downside risk."

I think her little method of measuring downside risk has been a bit more accurate than these critics, no?  My only words of advice for Ms. Whitney would be to not get too chummy with the David Viniar's (Goldman's CFO) of the world.  Last week Ms. Whitney came out and categorically denied that Goldman Sachs was interested in buying a bank. The basis of this call was because David Viniar told her so.  Ms. Whitney has become the oracle, and there is no better person to spread disinformation through than the current Wall Street oracle.  If Goldman Sachs wants to buy a bank, they are going to use "the oracle" to take the wind out any rumors that could push target bank stocks up.  It's easy to lose your way when the whole world is blowing smoke up your keister.  Additionally, whats with the zebra skin?

Comments

[aaron]

No veo en esto el sentido.
http://www.shampes.com/

maryjane

[miami internet]

This is such a scary true!!
Whitney has shown one of the most powerful positions about or financial crisis and the worst part.. She makes so much better sence than other "wall street experts"

[Generic Viagra]

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[eric]

Thank you for the very insightful comments Anand. I do respect that Whitney seems to have gotten the joke quicker than most equity analysts with regard to the current bank capital crisis. However, I am very amused with how she has obtained such star quality. The more the media builds her up, the greater the comedy.
I used to get mad at such things but now I just laugh at the folly.

[Anand Sanwal]

Meredith Whitney is grossly overrated unfortunately.

She’s undoubtedly made some prescient calls and hasn’t been shy in making them aggressively and in an outspoken manner (hence the media attention), but the question really is whether Meredith Whitney is more sizzle than steak?

When you look at her performance as reported in Fortune, you get some perspective into this. The Fortune article writes:

“Whitney’s insights haven’t always translated into lucrative investment picks. Based on the performance of her buy and sell recommendations relative to her industry peer group - what analyst tracker Starmine refers to as an analyst’s “industry excess return” - 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. That said, evaluating Whitney solely on the timing of her buys and sells misses the point. It’s not just that she’s bearish on the entire banking industry. What makes Whitney so interesting is the brutality of her arguments and the evidence she summons in making them.”

Based on the statistics aka something we call the facts, Meredith Whitney isn’t that great a stockpicker. And 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 doesn’t “miss the point”. It is the point.

However, the media love a story and Meredith Whitney provides it. She is married to a WWE wrestler which adds to the media-friendliness of the whole circus. And more importantly, she makes swing for the fences calls which attract attention. If she was wrong and once she is, she will fade 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 crowd are is being drowned out by the magnitude of correctness no matter how frequent.

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

[eric]

The only way it works is if her pro-wrestler husband wrestled the zebra down while on safari and Meredith killed the beast with a bite to the neck. Which may have happened.

[RPB]

it would be cool if she was a male, 27-year-old jersey guido with perpetually spiked hair. i do not care how much it costs either. this is something a "look at my new haircut" guy would own. so tacky

[mike]

actually, I think the zebra look is kinda hot!