Posted on 09/01/2002 1:31:49 AM PDT by Liz
Edited on 05/26/2004 5:08:20 PM PDT by Jim Robinson. [history]
SO now we know. There was a great big kick-back scheme going on right before our eyes - and a creatively cunning one.
Up until now, many investors, even market veterans, were scratching their heads over the curious underpricing of IPOs in the glory days of the late 1990s. You remember the headlines: Priceline.com stock up 600 percent in its first day of trading! iVillage shares quadruple!
(Excerpt) Read more at nypost.com ...
I don't think her company is in the same league as these guys. While I don't know the original IPO price for MSO, Yahoo charts show that it initially traded around $40 in late '99. (There were no huge spikes up after it started trading.)
Within 6 months or so, it had dropped to around $15. It tried to come back but it's got a pretty ugly chart and never got back to its initial levels.
Is this how Terry McAuliffe made mathematically impossible profits on Global Crossing? Will the path lead through him to Rubin and Clinton?
-PJ
Even so, the stock certainly didn't spike like the other companies (the ones mentioned in the article) did. Its initial trades were at the $40 peak and it's been downhill from there ever since.
I'll see if I can find the original IPO price also.
Here's an excerpt from a column connecting Salomon Smith Barney to Global Crossing:
Analyze This: Wall Street Gives Investors The Finger, by Arianna Huffington.
Not surprisingly, the more investment banking dollars analysts helped generate for their firms, the bigger their paychecks grew. At Smith Barney (now Salomon Smith Barney), for instance, analysts were given an end of the year statement that showed just how much of their income was "earned" the new-fashioned way -- by blowing kisses across the Chinese Wall that theoretically, and only theoretically, separates the firm’s banking and research departments. The amount was euphemistically labeled a "helper fee." It should have been called a "help yourself fee."One analyst who most certainly did was Salomon Smith Barney’s Jack Grubman, the high-flying telecom power broker whose fence-straddling efforts netted him $20 million a year. He must have been very helpful indeed. "What used to be a conflict is now a synergy," Grubman helpfully explained before the telecom bubble he helped create burst. "Someone like me who is banking-intensive would have been looked at disdainfully by the buy side 15 years ago. Now they know I'm in the flow of what's going on."
Last week, we learned just how "in the flow" Grubman was, with reports that he acted as an unofficial -- and undisclosed to investors -- consigliere to Global Crossing Chairman Gary Winnick. Apparently, at the same time that Grubman was telling investors how bullish he was on Global, he was advising the company on everything from merger deals to major hiring decisions.
This check-to-cheek relationship paid off very handsomely for Grubman, Winnick, and Salomon, but cost investors who relied on Grubman’s opinion $57 billion when the company went belly up in January. Would a more objective analyst have maintained a "buy" rating on Global Crossing, as Grubman did, even as its stock price plummeted from a high of $61 to $1.07, at which point he finally cut his evaluation to "neutral?" Of course, back when he was Master of the Telecom Universe, Grubman had derided the very notion of objectivity, scoffing: "Objective? The other word for it is uninformed." Translation: Only fools, suckers, and outsiders play fair.
-PJ
-PJ
the fact that the bankers underestimated the public appetite for hype and didn't know that dot-bomb and other miscellaneous high-tech offerings would be instantly bid up to ludicrous levels by idiot "investors" isn't surprising
the fact that goldman was priced "correctly" was because the brokerage biz was and is a relatively well known quantity, and to try to draw any inference from it regarding how dot bombs were priced is ridiculous
to suspiciously note that there was no complaint from the offering companies is the height of silliness
etoys, for instance, got about $160 million for a totally stupid pipe-dream which had never done anything but burn cash at a ferocious rate, and all of its insiders had just become multi-millionaires and were proud of the fact that it instantly quadrupled, further inflating their net worth and egos
the bankers will all produce pre-ipo tentative order books which justify their pricing of every new issue
the "news" that ipo shares got funneled to friends and potential clients of the offering brokers is like disclosing that the sun rises in the east
Anyone care to post some pix?
Here's another bankrupt jewel from Salomon Smith Barney and Goldman Sachs;
Pinnacle Towers which made an estimated $8 million dollar payment to a Mark C. Sappertsein (personally)for certain cellular tower assets which Sapperstein had obtained in a very questionable manner.
Mark Sapperstein just happens to be a very close personal friend and political crony of the Maryland Attorney General, Joseph Curran Jr.
Now that Pinnacle is in bankruptcy the private investors (shareholders)get the shaft while certain parties now get the cellular tower assets for pennies on the dollar
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