For all the handwringing about securities regulators' plans to scan message boards for fraud, be glad paranoia and emotional stupidity isn't illegal.
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Otherwise many folks who live on these boards would be under SEC scrutiny. Consider this Mar. 23 message. The caps and spelling are the poster's:
"DLJ IS TRYING TO LOAD UP AHEAD OF EARNINGS IN APRIL, IN ORDER TO DO THAT THEY HAD TO DOWNGRADE CPWR ... THIS A VERY CHEAP WAY TO ROB SMALL INVESTERS ... AS I WAS SHOPPING FOR A BROKER AND I WAS TILTING TOWARD DLJ, I WILL NEVER JOIN THAT FIRM EVEN FOR FREE. LAW MAKERS SHOULD PUT AN END TO THEESE MAFIA PRACTICES IN THE MARKETS blah blah blah..."
That comes off Yahoo! Finance's message board for Compuware (Nasdaq: CPWR), a stock under siege today following the company's warning of an earnings shortfall. Analyst Joseph Farley, of the Donaldson, Lufkin & Jenrette firm being blasted in the previous paragraph, displayed prescience in downgrading CPWR nearly three weeks ago.
At the time, CPWR longs did the sadly predictable thing in accusing DLJ of market manipulation, when Farley was just doing what analysts are supposed to do, which is ... big surprise ... analyze companies. Judging by today's announcement, Farley happens to do his job very well. Or at least he did this time.
Analysts never win in the court of near-term public perception. Either their downgrade/upgrade comes after the fact of bad news, or if they try to anticipate, they become the targets of individuals convinced the Wall Street Establishment is out get them.
Yet the number of times Wall Street research arms try to "rob" small investors is vastly overstated, if for no other reason than most analysts lack the power to move the market. You can count the number of nationally influential investment banks on two hands, and not every analyst within those banks carries the same weight.
Nonetheless, you may ask: do institutional clients get on investment banks' case to prop up a stock? Of course they do. So what?
It doesn't matter if Doe Mutual Fund pressed Profit, Profit & Profit brokerage for a downgrade on Wally's Widget Co. What you should do is read the analyst report yourself and decide if it makes sense. If you're reading this column, you obviously have Internet access, so it shouldn't be hard to get a subscription to Multex or First Call or Zack's or whatever research information service you want, so you can read any major analyst report.
You might not get it right away, but if you're a true long-term investor, immediacy isn't as important. And if you're a trader, you don't care about "market manipulation" anyway, you just work with whatever a stock's trend seems to be.
If you're an individual, long-term investor, you have enough to worry about. Focus your time on researching companies instead of wasting mental energy on the shenanigans of institutions. Then again, folks so emotionally tied to a stock as to accuse any and all critics of ulterior motives has no business investing. Save the cheerleading smears for professional wrestling.
Rest assured of one thing: despite the assertions of that brokerage ad with the cranky fund manager screaming about Morgan and the Fox Brothers, Wall Street's institutions care not at all about what you're doing. So why should you worry about them? As long as you do your own work correctly, all the market manipulation games in the world won't make a bit of difference.
As is the case more often than not, I was wrong. The company sees a swarm of U.S. activity.
StarMedia reported first quarter results positive enough to drive the stock higher today against a tide of Nasdaq red. The company credited the United States and Mexico.
"We decided to really accentuate our efforts in those two markets, and were successful in seeing very good growth in those two markets," StarMedia CEO Fernando Espuelas said this morning, in a telephone interview with ZDII. "It roughly mirrors our traffic flows, so Mexico is about a third (of revenues), Brazil is a little bit under that, and the U.S. is our third (largest) market with about 13 or 14 percent."
Thirteen percent first quarter revenue equals about $1.3 million, or more than two and a half times the revenue of the only publicly-traded pure U.S. Hispanic portal play, Quepasa.com (Nasdaq: PASA), which reported sales of $500,495 in the December quarter. Perhaps that's why PASA trades at just above $5 a share at this point.
Not that StarMedia hasn't seen better days. STRM shares never recovered from a pair of analyst downgrades in mid-March.
(Damn Merrill Lynch and Salomon Smith Barney! Their clients must have wanted to buy in on the cheap ... not. More likely it was an excuse for funds to bail out of StarMedia, just as they bailed out of most Web content stocks)
Maybe this latest quarterly report will provide the excuse for a sustained rally, although the stock has been been affected by other things, like M&A rumors. I don't know if they're true or not -- I doubt it -- but Espuelas isn't encouraging thoughts of a merger or acquisition:
"We're not closed to it, but we're certainly not actively looking for it either. If there is an opportunity to do something interesting, we'll certainly consider it, but that's not really our focus, or not our strategy, or not our hope even." 22GO>