What Happened to Wall Street’s Famous Bulls . . . and to the Bear Who Growled at Enron?
from May/June 2003
by Alison Rogers
Tell your kids that you remember Amazon.com stock at 400—it recently stood at 21—and they’ll look at you as if you use a deskbound phone. But a mere three years ago, before New York’s crusading attorney general, Eliot Spitzer, was top of many a mind, dot-com boosters such as Mary Meeker and Henry Blodget were heralded the way, well, Eliot Spitzer is today.
Fame has proved as fleeting as many Wall Street jobs. Here’s where some of those bulls—analysts, strategists, and the like—are now.
Mary Meeker, 43
Internet analyst, Morgan Stanley
Barron’s dubbed her “Queen of the Net.” Institutional Investor ranked her No. 1 among her kind. The New Yorker devoted 11 pages to a glowing profile. And Womensinvest.about.com, an Internet site popular in the market’s heyday, said somewhat repetitively, “Meeker has the potential to make or ruin the potential of any Internet stock.”
Meeker won raves for early buy recommendations on Microsoft and Dell Computer. She flubbed a couple of calls—she passed on Yahoo!’s IPO, missing a chance to get in early on a stock that was to go up 8,500% in the coming years, and she stayed bullish on Priceline.com as it tanked. Meeker herself survived (nicely, making up to $15 million a year) until the whole tech market crashed in 2000. Her press coverage took a different direction then, too—witness Fortune’s April 30, 2001, cover story, “Where Mary Meeker Went Wrong.”
Today she still has her job as a managing director at Morgan Stanley, covering technology. She now recommends Yahoo! (recent price: $19.83, down from its high of $237.50), arguing that it has “become a classic growth stock.”
John Olson, 61
Energy analyst, Merrill Lynch
They say no man is a prophet in oil and gas country. For years Olson had expressed extreme caution about one company that engendered only praise among his peers. In fact, his refusal to rate Enron a buy so irritated some of Merrill’s investment bankers that they complained he was costing them deals. The firm sided with them, and in 1998 Olson was pushed into early retirement.
He landed at Sanders Morris Harris, which is based in Houston, Enron’s hometown, but his new chief-investment-officer job didn’t bring a change of mind. “Enron has 40 miles of hard road ahead,” he opined in an interview with U.S. News & World Report in 2000. That article stuck in the craw of Enron’s then-CEO, Ken Lay. He wrote, “Don—John Olson has been wrong about Enron for 10 years and is still wrong—but he is consistant [sic]” in the margin of the article and sent it off to Olson’s boss, Don Sanders.
It was a waste of a stamp. Not only did Olson keep his job, he’s now the custodian of that magazine page. It’s framed and hanging on the wall of his office.
Henry Blodget, 36
Internet analyst, Merrill Lynch
Like Thomas Crapper and Vidkun Quisling before him, his name has become part of the vernacular. To blodget a stock means to talk it up. Beneficiaries of his blodgeting included almost every dot-com stock on earth, though Thestreet.com once gushed, “He makes the tough calls, using common sense in the irrational world of Internet stocks.”
The Wall Street Journal characterized Blodget differently—“Now He Tells Us”—after he downgraded eBay, Pets.com, Webvan, and eight other stocks that had already fallen, in one case by 95%. Worse was to come when attorney general Spitzer released Blodget
e-mails in which he privately derided as “dogs” some of the stocks he’d publicly recommended. Blodget, who had been earning some $10 million a year, accepted a $2 million goodbye package from Merrill.
These days he’s reportedly writing his memoirs while under investigation by the National Association of Securities Dealers. In January the NASD said it would be bringing charges against Blodget, possibly for securities fraud.
Abby Joseph Cohen, 51
Chief strategist, Goldman Sachs
Though she had a bit of a slow start after joining Goldman in 1990, she successfully predicted in 1991 the long-term bull market of that decade. In 1998 Business Week dubbed her the “prophet of Wall Street” and “one of the most closely watched forecasters on the planet.” She earned a Goldman partnership that same year, which means that she probably made around $100 million in the firm’s subsequent IPO.
Cohen was, however, reluctant to recognize that Wall Street’s tune had changed, and stuck with her bullish predictions—and her passion for tech stocks—well into the bear market of the 21st century. She’s still an optimist, albeit one with different leanings. “By and large, equities are the place to be,” Cohen recently told Barron’s. “We’re looking for things related to consumer service. Delta [Air Lines] falls into that category, as does Viacom.”
Jack Grubman, 49
Telecommunications analyst, Salomon Smith Barney
Remember when the world was young and full of data and there was a race to lay down fiber-optic cables to carry it all? Jack Grubman does, since he followed stocks such as WorldCom, Global Crossing, McLeodUSA, and Metromedia Fiber Network. Fawned New York magazine in 2000: “A lot of rather distinguished investors have come to share Grubman’s philosophy: Forstmann Little, which invested $1 billion in McLeodUSA and $850 million in Nextlink . . . and Microsoft, one of a group of investors that recently signed $900 million over to Winstar Communications.” The story went on to say of WorldCom, “the stock is cheap.”
WorldCom wasn’t the only company among this bunch to fall off the edge. They all did. But Grubman’s publicity got worse in the wake of his successful effort to get his twin toddlers into preschool at New York’s 92nd Street Y, an entry that seems to have been eased by a $1 million donation to the school from another parent—Citigroup, which owns Salomon Smith Barney. Did Grubman change his rating of AT&T stock in a quid pro quo? No connection has been proved, but many see the scandal as a case of tit for two tots.
Grubman, who has quit his $20 million-a-year brokerage job, has reportedly agreed to pay a $15 million fine as part of the settlement of an investigation into whether he and Citigroup favored corporate clients over individual investors. He has also agreed to leave the securities biz.
Holly Becker, 36
Internet analyst, Lehman Brothers
She earned high praise for knowing when to quit, especially by going neutral on Yahoo! in 2000, before it fell from $134.25 to $12, and downgrading Amazon.com to neutral in July of that year, before its stock chart took on the look of a ski slope.
But the current scandal swirling around her involves pillow talk—and in a feminist twist, she may be the one who did the talking. Regulators have taken note that in 2000 her then-fiancé, Michael Zimmerman, made a killing by short-selling Amazon the day before Becker downgraded it. Just coincidence, or an attempt to bolster her $10 million paycheck? The Securities and Exchange Commission is investigating the couple (she’s now Mrs. Zimmerman). Is Becker still a Lehman employee? A Lehman spokeswoman said, “I can’t comment.” Becker’s office voice mail reports that she’s away on maternity leave.
