Tag Archives: Markets coverage
Charges filed in Facebook IPO fraud
by Liz Hester
Beware where you buy shares in initial public offerings, since apparently those can be faked just like lottery tickets or anything else.
Federal prosecutors filed charges Tuesday against a Florida man for trying to sell fake Facebook shares.
Here’s the story from Wall Street Journal reporter Chad Bray:
A Florida financier who once served as Oregon’s state Republican chairman has been arrested in an alleged multimillion-dollar scheme to market fake shares of Facebook Inc. and other social-media companies before they went public, federal authorities said Tuesday.
Federal prosecutors in Manhattan alleged that Craig Berkman, 71 years old, promised investors in two separate schemes that he had access to shares of Facebook, well before the company’s closely watched initial public offering last year. However, he never held the shares and used millions of dollars he received from investors for his own benefit, prosecutors said.
Mr. Berkman allegedly raised $8 million from investors as a result of his claims to having access to Facebook shares, prosecutors said.
“Craig Berkman seized on the interest in a highly coveted investment opportunity to swindle investors out of millions,” said Preet Bharara, the U.S. attorney in Manhattan.
A lawyer for Mr. Berkman didn’t immediately return a phone call seeking comment Tuesday.
Reuters added these details to the story:
Craig Berkman, 71, falsely told investors he had access to scarce pre-IPO shares of Facebook and other social media companies such as LinkedIn Corp, Groupon Inc and Zynga Inc, the U.S. Securities and Exchange Commission said in a statement.
But instead of buying shares for investors as promised, Berkman made “Ponzi-like” payments to earlier investors and funded personal expenses, including costs in a bankruptcy case, according to the SEC, which filed a civil case.
The Manhattan U.S. Attorney’s Office charged Berkman with two counts of securities fraud and two counts of wire fraud. Each count carries a maximum of 20 years in prison.
In one allegation, more than 50 investors sent $4.6 million into a bank account controlled by a Berkman entity called Ventures Trust II, according to the complaint filed by the Manhattan U.S. Attorney’s Office.
Berkman told investors the funds would be used to buy pre-IPO shares of Facebook, but instead the “vast majority” was transferred to other accounts Berkman controlled for his own personal benefit, according to the complaint.
Berkman has long been active in Oregon politics and served for a time as the head of the state’s Republican Party, according to press accounts. He lost in the Republican primary for governor in 1994, and he explored a bid for governor in the 2002 race, according to The Oregonian.
The SEC’s order details what the agency called a “recidivist history” for Berkman.
The Oregon Division of Finance and Securities issued a cease-and-desist order and a $50,000 fine against Berkman in 2001 for offering and selling convertible promissory notes without a brokerage license, according to the SEC statement.
In 2008, an Oregon jury found Berkman liable in a private action for breach of fiduciary duty, conversion of investor funds and misrepresentation to investors related to his involvement with a purported venture capital firm, according to the SEC.
Berkman reached a settlement with the firm, called Synectic Ventures, after it filed an involuntary Chapter 7 bankruptcy petition against him in 2009 for debts he didn’t pay related an earlier judgment against him for $28 million, according to the SEC.
Rather than use his own money to pay the claims, Berkman spent more than $5.4 million from investors in his pre-IPO offerings to make payments in the bankruptcy settlement, according to the SEC.
I guess there is something to be said for buying stock through a broker affiliated with a bank. At least you know your money isn’t going to pay back old debts. And you’ll actually get the stock shares instead of nothing.
The business media on wash trades
by Liz Hester
The markets are going through another revolution in the form of wash trades, which can be used to manipulate the markets.
The Wall Street Journal had this story:
U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes.
Such transactions, known as wash trades, are banned by U.S. law because they can feed false information into the market and be used to manipulate prices. Intentionally taking both sides of a trade can minimize financial risk for the trading firm while potentially creating a false impression of higher volume in the market.
The Commodity Futures Trading Commission is focused on suspected wash trades by high-speed firms in futures contracts tied to the value of crude oil, precious metals, agricultural commodities and the Standard & Poor’s 500-stock index, among other underlying instruments, the people said.
The agency is looking at potential wash trades by multiple high-speed firms, although it isn’t known which ones investigators are scrutinizing. Firms found guilty of intentionally distorting the market through wash trades could face hefty fines.
Investigators also are looking at the two primary exchange operators that handle such trades, CME Group Inc. and IntercontinentalExchange Inc., the Atlanta company that in December agreed to purchase NYSE Euronext for $8.2 billion, the people said. Regulators are concerned the exchanges’ systems aren’t sophisticated enough to flag or stop wash trades, the people said.
“We actively enforce rules prohibiting wash trading, and we’re in the process of developing technology to prevent wash trades as prohibited by CME and CFTC at the trading-engine level,” a CME spokeswoman said. CME plans to introduce new technology the middle of this year, she said.
The problem with these trades is that they manipulate the prices for regular investors. So, there’s really little chance that the markets will be fair. Here’s more:
The investigations highlight how regulators continue to struggle with today’s complex high-speed markets and the ties between exchanges and their valued high-frequency customers. Securities and Exchange Commission investigators have been probing whether stock exchanges have provided certain advantages to sophisticated firms that allow them to trade at the expense of regular investors.
Exchanges say such advantages allow the firms to trade aggressively and provide better prices for regular investors who are trying to buy or sell.
Regulators also have pressed exchanges to improve their oversight in the wake of a flurry of computer-driven glitches last year, including the debacle that caused Knight Capital Group to suffer losses of more than $450 million and the flubbed Facebook Inc. public offering by Nasdaq OMX Group Inc.
“High Frequency Trading-Controlling the Risks” was the first agenda item in a nonpublic meeting of CFTC commissioners and international regulators last week at the closely watched Futures Industry Association conference in Florida, a copy of the meeting agenda reviewed by The Wall Street Journal shows.
European and U.S regulators questioned industry representatives on whether high-frequency traders hurt or helped the markets, people at the meeting said.
With wash trades, one difficulty regulators face is proving the suspect trading is intentional, a standard required by many securities and commodities laws. In today’s fast-moving markets, some firms say it is relatively easy for their buy and sell orders to cross by mistake.
But the scale of the suspicious trading activity is so large that it appears to some market watchdogs to be intentional, said people familiar with the matter. Futures-trading data from 2012 being scrutinized by CFTC examiners show that often, several hundred thousand potential wash trades occur a day on futures exchanges, the people said. Regulators have zeroed in on CME, where the majority of the potential wash trades have occurred, the people said.
It’s just another layer that individual investors have to navigate before making money. More importantly, at least the regulators are finally on top of another market issue. Let the reviews begin!
Push back on ETF fees
by Liz Hester
The Wall Street Journal had an interesting story about Fidelity and exchange traded fund fees on Thursday. Many ETFs are touted as a way for individual investors to gain exposure to various asset classes.
But according to the WSJ, the fees may make it harder for Fidelity to capture market share:
Some financial advisers said they would stop using Fidelity Investments’ trading platform to buy certain exchange-traded funds because of high fees that kick in when investors sell.
Fidelity on Wednesday announced it would begin offering 65 ETFs from BlackRock Inc.’s iShares unit without charging customers a trading commission. The deal expands a previous agreement involving 30 commission-free ETFs.
But the Boston money manager is tacking on an additional fee of $7.95 a trade to investors who sell the ETFs within 30 days and to financial advisers who sell within 60 days.
Advisers also complained that Fidelity replaced 10 of the commission-free iShares ETFs on its previous menu. Nine of the new ETFs have lower trading volumes, suggesting they are less popular with investors.
The episode is another blow for Fidelity, which has missed out on the ETF boom of the past several years. Investors have favored stock ETFs over actively managed stock-mutual funds—Fidelity’s specialty—since 2006. Last year, investors poured $54.8 billion into stock ETFs and yanked $131.5 billion from actively managed U.S. stock funds, according to investment-research firm Morningstar Inc.
While rivals Vanguard Group Inc. and BlackRock have built big ETF businesses, Fidelity has barely made a dent.
While Fidelity continues to lose ground in this space, some rivals are finding it lucrative, the WSJ said.
Fidelity has much riding on the iShares deal. Investors pulled $24.4 billion from Fidelity’s stock funds in 2012, and its operating revenue dropped 1% to $12.6 billion.
By becoming a partner with BlackRock, the largest ETF provider in the U.S., Fidelity hopes to gain exposure to the fast-growing ETF market.
But a backlash from financial advisers could derail those plans. The additional fees “could alienate their core market,” said Scott Freeze, president of Street One Financial, an ETF trading and advisory firm.
Advisers said they are worried the redemption fee will hit hardest investors with less money. “If you’ve got a million-dollar account, then it’s not going to be huge,” Mr. Tuttle said. “If you have a $2,000 account, that’s massive.”
Rivals such as Vanguard, Charles Schwab Corp. and E*Trade Financial Corp. don’t charge a redemption fee on commission-free ETFs. TD Ameritrade Holding Corp. charges $19.99 a trade if an investor or financial adviser sells within 30 days.
Stories like these are important so investors can evaluate where their money is going to make sure they’re getting the best deal possible. The news follows an announcement about Fidelity ramping up its offerings, according to the Boston Globe:
Fidelity Investments is ramping up its small presence in the growing business of exchange-traded funds by expanding a three-year partnership with BlackRock Inc.’s iShares unit, the largest ETF provider.
BlackRock, in turn, will be able to sell its iShares ETFs to a much broader range of investors, including Fidelity customers and their industry-leading 18.5 million brokerage accounts. BlackRock does not have anything to rival that client base.
Boston-based Fidelity and New York-based BlackRock announced the partnership Wednesday. The companies agreed in early 2010 to cooperate on a smaller scale in a three-year deal that expired. Under it, Fidelity offered its brokerage clients commission-free online trades on 30 iShares ETFs. The commission-free total expands to 65 under the new pact. With $250 billion in assets, those ETFs invest in US and foreign stocks and bonds, as well as commodities.
Fidelity also will create new options for its customers to build investment portfolios using iShares ETFs. And BlackRock agreed to help Fidelity develop new funds that passively track narrow segments of the market, such as stocks of companies in specific industries.
Either way, Fidelity should examine its offerings to see if it can actually capture the market share it is looking to gain.
WSJ’s “Heard on the Street” adds two in London
by Chris Roush
Simon Nixon, the European editor of “Heard on The Street” in The Wall Street Journal, sent out the following staff announcement Tuesday:
I am delighted to announce two new additions to the Heard on the Street team in Europe. Helen Thomas will join us from the Financial Times as deputy European editor of Heard on the Street. John Jannarone re-joins the Heard team as a reporter after a stint on the WSJ’s media team in New York. Both Helen and John will be based in London.
Helen is an outstanding journalist who was most recently the FT’s mining correspondent where she was responsible for a string of scoops relating to the renegotiation of Glencore’s bid for Xstrata and the scandal surrounding Bumi Plc. Before that she was the FT’s New York-based mergers and acquisitions correspondent, a writer on the Lex column an on the Alphaville blog. Helen began her career at JP Morgan. She has a first class degree in politics, philosophy and economics from Oxford University.
John was one of the original members of the Heard team when it was re-launched in its current form in 2008. He established himself as one of the Journal’s star reporters with, among other coups, his 2011 Heard column exposing accounting irregularities at Diamond Foods, which triggered a 70% fall in the U.S. food company’s stock price, the collapse of a planned $2.4 billion takeover of Pringles and the resignation of the CEO. John joined Dow Jones Newswires in 2006 in Singapore where he was deputy bureau chief and moved to New York in 2008. He began his career as an analyst at Morgan Stanley and also worked as a trader for a Dallas-based hedge fund. He studied at Princeton University where he graduated cum laude in economics.
Please join me in wishing Helen and John success in their new roles.
WSJ finance and markets team names new editors
by Chris Roush
Wall Street Journal financial editor Francesco Guerrera sent out the following staff announcment on Friday afternoon:
We have begun building a unified Finance and Markets team in the U.S. and around the world to improve and broaden the accurate, speedy and sophisticated news that is the trademark of Dow Jones. Our aim is to create an integrated team of editors and reporters capable of providing all our readers with the scoops, analysis and enterprise journalism they expect on all our real-time and print platforms.
As part of our revamped team, we’re pleased to announce senior appointments that mark an important step in making our finance and markets coverage deeper, broader, faster and infused with the enterprising, high-impact journalism for which our organization is renowned.
–Rick Brooks, a veteran editor known for his deep knowledge of markets and commitment to deep stories is named Senior Deputy Editor for the Finance and Markets group in charge of enterprise. Rick, whom a senior editor once called “the rock of Money & Investing,” will continue to deputize for Francesco on all matters and be in charge while Francesco is away, while taking on particular responsibility for enterprise stories and the daily Money & Investing section.
–Emma Moody, who has improved our markets coverage tremendously in the last four years will become Senior Deputy Editor for the Finance and Markets group in charge of real time. In this new role, Emma will mastermind our real-time offerings on both the wires and the website, building on our existing strengths while ensuring that we devote resources and journalistic expertise to continue to improve our work.
–Colin Barr, who has been running the Journal’s banking team, is named Markets Editor for the new group. In his new role leading our largest team, Colin will ensure that the group’s two dozen reporters are deployed to best cover market news across the full spectrum of asset classes, from stocks to foreign exchange and commodities. Colin’s role will be a crucial one as the integration proceeds because a large portion of our real-time audience is interested in markets-related news and expects the Journal to be the premier provider of this information.
–Anna Raff will be Colin’s deputy. Her deep markets knowledge and substantial talents as an editor for both real-time and print will be extremely valuable as we reshape our markets offering with greater emphasis on impactful news that can move markets and be of use to readers and subscribers.
–Brian Baskin is named FX and Commodities Editor. As the head of the combined FX and Commodities teams, Brian will oversee two of our most important areas of markets coverage. Both foreign exchange and commodities will be key to our integration efforts as demand for information on those two subjects is huge both for real-time and print.
–Tom Lauricella is named Stocks Editor. Tom is one of our most senior writers, and in this player-coach role he will focus on organizing our stocks coverage, develop and mentor reporters in his team, and continue to report big stories affecting investors.
–Liz Rappaport is named Credit Markets Editor. Liz will be charged with running a half-dozen reporters covering all aspects of credit markets trading, another area where real-time performance will be crucial to our success. She, too, will take on a player-coach role.
Brian, Elizabeth and Tom will all report to Colin.
–Dana Cimilluca, one of the brightest stars in the M&A firmament with a proven ability to break stories, will return to New York from London to become deputy M&A editor reporting to Jamie Heller, our M&A editor. He and Jamie will spearhead our M&A coverage, a premier franchise for The Journal both in real time and in print.
–Justin Baer, who has been running The Journal’s investing group, will become a Wall Street reporter. Justin is one of the most experienced financial reporters around, with an encyclopedic knowledge of the financial industry and an impressive Rolodex. In his new role, he will lead our Wall Street coverage with a special focus on Goldman Sachs.
The integration effort in the unified Finance and Markets team is only a few weeks old, but we are already seeing glimpses of what our new organization will be able to produce, both for real time and print.
We will soon announce further appointments. Please join us in congratulating our new hires and wishing them well in their future roles.
Fox Biz Network’s stock reporter celebrates 25,000 reports
by Chris Roush
Fox Business Network‘s Nicole Petallides celebrated her 25,000th report from the floor of the New York Stock Exchange on Thursday.
She received gifts from the stock exchange, including a gold badge.
Watching the stock market’s swings
by Liz Hester
Wall Street Journal markets editor extraordinaire (and personal friend) Emma Moody tweeted Tuesday morning: “Please, please just let this death-by-1000-ticks saga be over…” Her link to the story “Stock Futures Track Global Markets Higher” was quickly replaced as the Dow climbed to a record close.
Let’s take a look at some of the coverage of this milestone. Here’s the WSJ closing bell story:
The Dow Jones Industrial Average surged to its highest closing level ever, finally overcoming the losses tied to the financial crisis on the back of a tenacious stock rally that began in March 2009. And the blue chips did it with an exclamation point—a 125.95-point blast that left the old record in the dust.
“It really does represent an achievement that we have climbed out of this crater,” said Jack Ablin, chief investment officer at Chicago’s BMO Private Bank, which manages about $66 billion.
The Dow advanced 0.9% to 14253.77 Tuesday to top its previous high of 14164.53, set in October 2007. Stocks plunged in the wake of the financial crisis, with the benchmark bottoming at 6547.05 on March 9, 2009.
The Standard & Poor’s 500-stock index rose 14.59 points, or 1%, to 1539.79 Tuesday. The Nasdaq Composite Index added 42.10 points, or 1.3%, to 3224.13.
The New York Times story expresses well some of the surprise surrounding the recent bull market’s stock surges.
Of course, a few things have happened since October 2007. The housing market collapsed, the financial system went into meltdown, the European Union started to fray and politicians dragged the United States through an on-off-on-again fiscal imbroglio.
But stocks managed to move beyond all that.
Since a low point in March 2009, the Dow Jones index has more than doubled, stunning even the most seasoned stock market watchers. It closed at 14,253.77 Tuesday.
“What’s amazing about this bull market is that people still don’t think it’s real,” said Richard Bernstein, chief executive of Richard Bernstein Advisors, a money management firm. “We think this could be the biggest bull market of our careers.”
On Tuesday in particular, leading indexes abroad rose after the Chinese government announced that it would step up spending and European data showed that retail sales there have been stronger than expected.
After the bell sounded at the New York Stock Exchange, stocks were pushed up even more after a reading on the service sector in the United States showed that it had risen to its highest level of activity in a year, surprising analysts.
Bloomberg’s story had some interesting perspective and facts about the recent gains.
The bull market in U.S. equities enters its fifth year this month. The S&P 500 has surged 128 percent from a 12-year low in 2009 as companies reported better-than-estimated earnings and the Federal Reserve embarked on three rounds of bond purchases to stimulate the economy.
U.S. stock indexes advanced this week amid optimism the Fed will maintain stimulus measures to support the economic recovery. Fed Vice Chairman Janet Yellen said yesterday the U.S. central bank should press on with $85 billion in monthly bond buying while tracking possible costs and risks from the unprecedented program.
Global equities also rose today as China pledged to support economic expansion. The nation will keep its growth target at 7.5 percent for this year and plans a 10 percent jump in fiscal spending, the government said during the start of the National People’s Congress today.
The Institute for Supply Management’s index of U.S. non- manufacturing businesses, which covers about 90 percent of the economy, rose to 56 in February from the prior month’s 55.2, the Tempe, Arizona-based group said today. Readings above 50 signal expansion. The ISM services survey covers industries ranging from utilities and retailing to housing, health care and finance.
Then there are the sidebars to the coverage to consider. NPR’s Planet Money had an interesting piece saying the Dow didn’t actually hit a record since the returns haven’t been adjusted for inflation, a fair point.
Just a quick, cranky reminder: Despite what you may have read, the Dow Jones Industrial Average did not hit a new high today in any meaningful sense.
After adjusting for inflation, the Dow was higher in 2000 than it is today. It was also higher in 2007. It would need to rise another 10 percent or so to hit an all time high in real (i.e. inflation-adjusted) terms.
When reporting on other numbers that change over time, it’s routine to adjust for inflation. So when people talk about wages stagnating for American households, it means that, after you adjust for inflation, the median wage is roughly the same as it was 15 years ago. If you didn’t adjust for inflation, you would say the median wage has risen by more than 40 percent over the past 15 years. But that would be a meaningless statement.
It’s equally meaningless for the Dow. And even if the Dow did hit a real, inflation-adjusted, all time high, it wouldn’t mean much anyway.
There are other, less arbitrary indexes of the U.S. stock market, such as the S&P 500, which tracks 500 (rather than just 30) big U.S. companies. The S&P 500, for what it’s worth, is below it’s all-time highs in both nominal and inflation-adjusted terms.
Then there are the poor people who fail to remember the mantra, “Buy low. Sell high.” According to WSJ, rising markets cause more people to pile in. Exactly the opposite of what everyone says you should do.
The Dow Jones Industrial Average is back in record territory, and now everyone wants a piece of the action.
Stockbrokers say clients are phoning in orders. Mutual-fund data show investors buying U.S.-stock funds, which they had fled for years.
This is classic investor behavior. History shows that investors typically get excited and jump into stocks when indexes are hitting records. They also tend to sell when indexes are down, which means they sell low and buy high. No wonder they have so much trouble matching index gains.
In all but one of the past six bull markets, investor purchases of stock mutual funds picked up right after the Dow’s first new record, according to Ned Davis Research. In the six months after that first record, the median flow of money into stock funds, in percentage terms, was three times as strong as in the six months before.
A bull market is commonly defined as a gain of 20% or more from a low, and it ends when stocks decline 20% or more from a high. The current bull market began in March 2009.
Unfortunately, bull markets tend to be getting long in the tooth by the time they hit record territory. There were exceptions, but the median bull market had less than two years to go after that first record.
Come on, people. Do you really think Warren Buffett is buying stocks now? It is interesting that the Dow has risen to a non-adjusted record, but this last story with its sad facts about investor behavior is the most compelling to me.
WSJ adds two to its markets desk
by Chris Roush
Tim Annett, acting chief of the markets desk at The Wall Street Journal, sent out the following staff announcements on Monday:
We’re delighted to announce two new additions to the Markets desk team:
Bradley Davis joins the desk starting today as Digital Editor. In this new role, Bradley will be responsible for a range of real-time duties, from holding the Markets pages to coordinating presentation and packaging of key markets events across the real-time realm to promoting Money & Investing and markets coverage on social media.
Bradley is well-placed to take on this challenge. He was mostly recently a news editor at FX Trader, where he helped build an indispensable real-time stream of commentary and analysis. The @djfxtrader Twitter account he managed along with editors in London has grown from zero to more than 30,000 followers in about a year; Business Insider named it one of the Top 101 Twitter feeds in finance. He also contributes a column to Barron’s. Before his role at FX Trader, Brad reported for two years for Dow Jones and The Wall Street Journal on the ups and downs of currency and Treasury markets, and traveled the US and Canada covering Federal Reserve officials. Brad has a master’s degree in journalism from Columbia University and a bachelor’s degree from the University of Nebraska-Lincoln, where he was managing editor of the Daily Nebraskan.
Lora Western will soon move over from the hub to become our deputy editor for real time. Lora will work closely with Bradley to elevate our real-time game, with broad responsibility for coordinating real-time news coverage.
Lora joined the Journal in 1992 as a news editor at The Asian Wall Street Journal in Hong Kong. Through the 90s, she followed Asia’s boom and bust (and the Hong Kong handover) as a page one editor then deputy managing editor of the Asian Journal.
In New York since 2000, Lora has served as foreign news editor, running the foreign desk; international-editions editor, shepherding a reorganization of the Asian and European editions’ news desk operations to consolidate more work in New York; deputy national editor (back when the news desk was about a fifth of its current size); and post-reorganization, as an editor on the national desk focusing particularly on special reports and other projects. Most recently, she has worked on the online news hub as part of the team holding the WSJ.com home page and other pages and prioritizing news for readers in real time.
Lora is a graduate of Northwestern University in journalism.
Please join us in congratulating Bradley and Lora on their new roles, and in wishing them every success.
At the intersection of Wall and Broad
by Chris Roush
Debra Borchardt of TheStreet.com worked in the securities business for almost 20 years, spending 15 of those years at Bear Stearns. Borchardt’s work experience covered such diverse areas as equities, fixed income and mutual funds with her last position in the clearing side of the business vetting money managers.
During her Wall Street years, she also worked as an actress appearing regularly in the soap opera “As The World Turns” and working as an extra on “Saturday Night Live.” She left the securities business to get her master’s degree in economic reporting at New York University.
Borchardt is now senior producer and a markets analyst at TheStreet.com. As senior producer, Borchardt is responsible for the quality and content of the videos at TheStreet, which produces 500 video reports a month. She is a frequent guest on CNBC, “Nightly Business Report” and ABC News Now.
Her twitter handle is @wallandbroad. For the uninitiated, the New York Stock Exchange is located at the corner of Wall Street and Broad Street.
Borchardt spoke earlier this week by email with Talking Biz News. What follows is an edited transcript. (And for the record, we are big fans of Borchardt’s business journalism.)
After more than a decade on Wall Street, why did you decide to switch careers?
One job I had during my financial career was summarizing the equity analyst presentations to the sales force. Eliot Spitzer changed all that and brokerages were petrified for anyone but an analyst to talk about stocks. I moved on to vetting money managers, but that wasn’t nearly as fun and I missed talking about the market. Wall Street ceased to be fun after Spitzer and I was ready to get out, but still make use of all my years of experience. I used to act in my off hours, so being an on camera financial journalist combined my years of wall street experience with my acting background.
How does being on Wall Street help you cover the markets?
There is nothing that can substitute for going to the stock exchange every day. Talking to the guys, getting a feel for the mood and tone. You can see at the opening what is happening at a post if a crowd gathers. It’s a fast way to get lots of sources and connections.
What is your typical day like?
I have a long commute, which I use to check what stocks are moving, answer emails, send tweets and do any social media. When I get to the office, I book my first interview on the floor and prep for that. Some mornings I tape with Jim Cramer, so I pitch him ideas. We normally tape three topics, so I have to be well versed in all three. Again – prep work. I have to write up titles and callouts for these videos right away which means I don’t come up for air until 11 or so. Next, I move on to booking interviews and preparing for interviews. Ordering graphics and finding broll for videos I am producing and some writing if I have time. I will tape as many as four to seven interviews a day.
What are your goals every day in covering the market?
I try to make sure I cover the items that will be the most important topic for the day. With so many options to choose from, it can be hard to prioritize what needs to be highlighted. I try to find a nugget of information that maybe other reporters haven’t hit upon on the main stories.
How is TheStreet.com’s audience different than other business media?
We have a very specific demographic. 85 percent male and mostly independent traders. They are affluent and knowledgeable about the market. So we can write and do video without having to always explain things. They mostly want stock advice, not piano-playing kittens. Our coverage is very stock focused, not so much the macro picture.
What do you think you do differently than other market reporters?
I feel like I bring an insider’s view to my reports. I tend to give color to my pieces, as opposed to straight news. I think my viewers can get market levels and headlines from most outlets, but I try to make sure I let them know what it means. Like, a stock is behaving contrary to its news. I’ll explain why as opposed to just reporting that a stock is moving in a certain direction.
How do you come up with something new every day to report?
That’s easy. There’s always news in a stock somewhere. Just look to see what stock is having lots of volume or trending on stock sites if the headlines are slow. I read a lot of SEC filings. There are a lot of hidden gems in S-1 filings for public offerings , which is an area I focus on.
Is there any difficulty in getting sources to talk when you’re reporting on investments?
Hedge funds are the worst to talk to. They never want to be interviewed. Mutual fund managers always want to talk because they want to push their fund. CEOs will talk if things are going well, but if they suddenly decline, then that means red flag and a story. Economists are terrible for video, they hedge every answer and go on and on, but they are good for print. Eventually you build up a nice network of sources, which is helpful because sometimes you end up smiling and dialing for hours to get the “right” source.
You also appear on other media. How does that help TheStreet.com?
Any time I can appear in other media, it promotes our web site. We don’t advertise and are dependent on portals and organic search. So, my appearances elsewhere gets our name in front of potential readers.
If you have some news that is breaking, how fast can you get it on the site?
We just renovated our studio, so I can tape and upload a video within minutes. We have the latest Tricaster switcher, virtual sets, LED lighting, new servers, fiber lines – you name it, we’ve got it. With our previous system, it would’ve taken 45 minutes. Our written articles can be published as soon as they are written.
Can you explain the “Test Kitchen” for people who have not seen it?
That video segment was born from reporters in the newsroom just talking about stuff we eat. Since we also cover companies, it was always a lively conversation. We’re all opinionated, so there is frequently a friendly disagreement over who has the best cupcakes or whether Chipotle is better than Cosi. We decided to put that conversation on tape and compare product as well as company. The better product isn’t always the better stock.
What is Jim Cramer really like?
I’ve worked with Jim for five years and continue to be impressed. He has a brilliant mind for stocks and a passion for the market. He is quite thoughtful in the office and has a laser-like focus for what he is trying to do each day. He is not like the “Mad Money” show; that’s TV, that’s different. No one wants to see calm and thoughtful on TV – that doesn’t sell. It’s Jim, but Jim in a ramped up way. But walking down the hallway at work, Jim’s calm and focused, which is amazing if you ever took a look at his schedule. I have learned a great deal from working with Jim. It’s been a true pleasure.
Not a great day for tech stocks
by Liz Hester
Wednesday wasn’t the best day for tech darlings Apple Inc. and Groupon Inc. Apple was hammered by investors, and Groupon was hammered by investors.
Here’s the story from Reuters:
Apple Inc CEO Tim Cook on Wednesday acknowledged widespread disappointment in the company’s sagging share price but shared few details about its secretive product pipeline and touched only briefly on a raging debate about how best to reward shareholders.
The world’s most valuable technology company headed into its annual shareholders’ meeting at its headquarters on shakier ground than it has been accustomed to in years, since the iPhone and iPad helped vault the company to premier investment status.
A declining share price has lent weight to Wall Street’s demand that it share more of its $137 billion in cash and securities pile – equivalent to Hungary’s Gross Domestic Product, and growing – a debate now spearheaded by outspoken hedge fund manager David Einhorn.
Einhorn was not spotted at the meeting at the company’s headquarters at 1 Infinite Loop in Cupertino. Cook repeated that the company’s board remained in “very very active” discussions about options for cash sharing, and said he shared investors’ dissatisfaction over the stock price.
“I don’t like it either. The board doesn’t like it. The management team doesn’t like it,” Cook told investors.
“What we are focused on is the long term. This has always been a secret of Apple.”
By focusing on the long term, revenue and profit will follow, he said.
Here are a few more examples from the Wall Street Journal:
There was little discussion about the issue that had emerged as a particularly hot topic before the meeting: Apple’s $137 billion cash hoard.
Hedge fund manager David Einhorn had been rallying Apple shareholders to vote against a company proposal related to how it could issue preferred stock. He opposed the proposal because he argued it would make it harder for the company to implement an idea he has been pushing for returning cash to shareholders.
Apple pulled that measure after a judge sided with Mr. Einhorn, who sued to stop it on grounds the proposal was improperly bundled with other items. Apple’s general counsel, Bruce Sewell, said Wednesday the company was “committed” to reviving the issue.
Mr. Cook volunteered that the company was in “very, very active discussions” about what to do about its growing stockpile, similar to remarks made earlier this month.
That wasn’t enough to satisfy some shareholders. New York State Comptroller Thomas DiNapoli, who oversees the New York State Common Retirement Fund, said “we were disappointed” that Apple didn’t offer a plan to deliver cash to shareholders. The fund owns about $1.3 billion worth of Apple stock.
At the annual meeting, Mark Zuercher, a retired transportation executive from Orinda, Calif., said he was “disappointed” and expected Mr. Cook might say more. “It was more of the same,” Mr. Zuercher said. He plans to hold onto his shares for now, declining to comment on the size of his stake.
Bloomberg also led with investors taking Cook to task for his use of company cash piles:
Apple shares slipped after Cook ended the company’s annual shareholder meeting without giving any additional insight on what he’ll do with $137.1 billion in cash and investments. Shareholders re-elected the board, approved Ernst & Young LLP as accountant and passed a non-binding measure on executive pay.
Cook is under growing pressure to use higher dividends, stock buybacks or a new class of preferred shares to compensate investors after Apple’s stock tumbled by more than a third from a September peak. The calls grew louder amid signs of slowing sales and profit growth and increasingly acute competition fromSamsung Electronics Co. (005930) and Google Inc. (GOOG)
Groupon also had a tough day in the stock market after disappointing outlook. Here’s the Reuters story:
Groupon Inc lost almost a quarter of its market value on Wednesday after the company began to take a smaller cut of revenue on daily deals, sacrificing revenue and profits to attract and keep merchants.
“This raises questions about how these guys are going to be able to scale the business,” said Tom White, an analyst at Macquarie. “The forecast is underwhelming.”
Groupon shares fell 22 percent to $4.65 in after hours trading on Wednesday.
The Chicago-based company started sharing more money from its deals with merchants early in the fourth quarter to persuade them to run an offer for the first time or work on another offer.
That dented revenue and profit in the fourth quarter, Chief Financial Officer Jason Child said in an interview.
“We are focused on driving growth,” he said. “We will make the investments we feel we need to optimize for growth and merchant profitability.”
Looks like investors in both of these companies will have to wait a little longer to see returns.
