Truth Serum: Chasing Barren <I>Barron's</I> Rumors

Chatter that someone is going to get blown up by the weekly paper isn't as reliable as it sounds.
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Biotech firm

Aronex

(ARNX)

has benefited from press coverage in recent weeks, including a mention in

Business Week's

Inside Wall Street column.

And this week, according to

JagNotes

, the fine reporters of

Barron's

will publish a piece outlining Aronex work in developing two new "cancer-related" drugs. Now, I'm not a doctor -- I don't even play one on TV -- but I know two things: Cancer-drug-stock plays are never the silver bullets they're priced to be, and almost as reliably, nearly every mention of an impending

Barron's

story proves false.

Apparently, the touts have gotten hold of Aronex at the end of its run and are trying to squeeze out a few extra bucks. The stock is up 70% since late June, but has risen less than 5% since money manager Stuart Weisbrod was humping it in Gene Marcial's June 29

BusinessWeek

column. And it's still less than eight bucks.

The company is awaiting regulatory word on two new products. But it takes more than mere approval to push a stock, especially once it has run up so much on the expectation. The ol' buy-the-rumor-yadda-yadda-yadda cliche should've been coined specifically for biotech stocks.

The

Barron's

stuff, on the other hand, has proven a reliable way to push stocks around for years, but according to one pro, the effectiveness of it is waning. That, however, hasn't stopped traders and talking heads from chattering about the possibility of juicy news come Saturday.

"It has very low credibility," says Lillian Seidman, an options pro at

Miller Tabak

, referring to a Barron's-related rumor, not the newspaper itself. "People still play it, though. They play anything when they're chasing rumors, but I've rarely seen it work."

Reader

Jim Raschiella

wants to know exactly who floats these Friday late-session "negative article may appear in this weekend's

Barron's

" rumors.

Well, they're not just negative rumors anymore. Good news about a product or a stock's prospects also is frequently rumored to grace

Barron's

murky pages.

But last week, the rumor mill spit out word that

Barron's

would dismember

AOL

(AOL)

. It didn't. Several weeks ago it was

Knight-Trimark

(NITE)

. "The Knight-Trimark article appeared not the weekend the rumor was floated, but the next," Raschiella writes, referring to a July 26 story about technology on Wall Street.

Well, Jim, the rumors likely come from pros who have been contacted by

Barron's

reporters fleshing out a story idea, or from sleazebags who lie about it in order to move a stock in their preferred direction. Whether that idea ever makes it into

Barron's

is another story. Reporters often spend weeks working on stories that never see the light of publication.

A spokesman for

Dow Jones

(DJ)

, publisher of

Barron's

, says the company never comments to anyone about what's going to be published in future papers. So you may see an article about Aronex and its cancer drugs Saturday in

Barron's

. But until it's in print, trading it may be hazardous to your health.