David Tice may be Wall Street's most faithful bear. Through the long, rising swell of this decade's bull market, Tice has doggedly decried the stock market's ascent, becoming a fixture on
any time the
drops 100 points or more.
But even though he and his mutual fund, the
Prudent Bear fund, have been consistently trampled by the bull, he still commands enough respect on Wall Street to knock shares of
for a loop with a negative call.
How can this portfolio manager, who runs just $221 million in his fund and who's been on the wrong side of Wall Street for so long, move markets? The answer may lie in Tice's other day job.
In addition to managing Prudent Bear, Tice publishes
Behind the Numbers
, a detail-oriented, balance-sheet-scrutinizing newsletter that goes to a scant 200 money managers. It was in that newsletter this past week that Tice raised questions about some of Tyco's accounting policies, a report that ultimately led to the stock's steep fall. (Tyco denies that it's got accounting problems.) Among
Behind the Numbers'
subscribers are some who swear by its calls.
"We have the utmost respect for David," says one New York based short-seller and subscriber who asked not to be named. "We tear into his stuff the minute we get it, because there's always something interesting there. I wouldn't necessarily equate his poor portfolio performance in the Prudent Bear Fund with him being wrong on his analysis."
Behind the Numbers'
biggest claim to fame was its undressing of
, while the appliance maker and its famous former chief executive, Chainsaw
, were still Wall Street darlings. But the newsletter has issued some other well-timed warnings on
, a Lake Forest, Ill., provider of used car loans now operating under Chapter 11 bankruptcy protection, and
), a long-struggling stock that spiked last spring before quickly falling to earth.
While the newsletter's picks have gained Tice a reputation for hard-nosed analysis, the way he runs Prudent Bear hasn't exactly garnered him the respect of mutual fund mavens.
Since its inception at the end of 1995, the fund has lost 48.6% of investors' money. In other words, if an investor gave Tice $10,000 when he launched the fund, he would have only $5,139 left today, according to
. This during a period when the
Could an Imprudent Bear Have Done Better?
"David's group does terrific analysis. I'm not sure they're such good portfolio managers," says the New York short-seller. "Sometimes running money is as much an art as a science."
"The problem that I see is that David Tice is always on
," says Ed Foster, director of research at
Fabian Investment Resources
in Huntington Beach, Calif., which runs its own newsletter that rates mutual funds. "The problem I have with a lot of fund managers is they're trying to sell their own story instead of saying what's really happening. You never hear David Tice say this market is going up, even though it's going up. He's a salesman."
Tice did not return a call seeking comment on how he runs the Prudent Bear fund, though he did talk to
on other aspects of the Tyco story.
Some say that Tice, as mutual fund manager, has run into the same problem that newsletter writers have bumped up against since the beginning of Wall Street punditry: It's easier to call 'em than it is to buy 'em -- or short 'em, for that matter.
"I think there are a lot of smart people out there who turn out to not be very good at running funds," says Russ Kinnel, an analyst with Chicago fund-tracker
Indeed, the Prudent Bear fund isn't the only lagging Tice portfolio. A model portfolio he runs for another newsletter,
, has returned negative 38.9% on an annualized basis over the last 20 months, according to Mark Hulbert, who runs a newsletter rating service in Annandale, Va.
Tice didn't start running Prudent Bear until the end of 1995, when the bull market already had a full head of steam. But he's been writing his newsletter for much longer, since 1988.
And maybe he is more nimble with the pen than the buy or sell trigger. Indeed, Tice admits he didn't actually short Tyco in his Prudent Bear fund.
"When the stock started to act, we thought about
shorting it, and part of me said we should have," Tice said. "But maybe we made the right decision not to. It was a flammable enough decision."
But he could have made money if he did. Maybe sometimes the bears can be right, even when they're wrong.
-- Staff reporter
Katherine Hobson contributed to this report.