Return of the Hostile React-O-Meter and Lessons From Integrated Health's Blowup

Also, why <I>Chainsaw</I> by <I>Business Week's</I> John Byrne should be required reading for all business and accounting students. Talk about it on our message board.
Publish date:

Tuesday's Trash

Hostile React-O-Meter alert:

Based on my email, it's starting to spin outta control in the wake of

yesterday's item on

Metromedia Fiber Network


. Must have a cult-like message-board following! The gist of most of the emails was that Metromedia has much


competition than I suggested (subject to interpretation), that the column's definition of dark fiber was flawed (pretty much came from the company's press release), that I didn't mention Metromedia's purchase of

AboveNet Communications

(that had nothing to do with the story) and that I'm an idiot (your call).

Tell us what you think on


Message Boards.

Insider insanity:

An item

here last week chided

CKE Restaurants


for trying to make its stock look cheap by announcing that it was lending money to its execs to buy its stock. (One of the oldest tricks in the book is to try to convince investors that a stock is cheap. If it's so good, the column wondered, why don't they use their own cash?)

Anyhoo (yes, as in moo), that reminded high-yield bond manager Chris Meng from

Cincinnati Asset Management


Integrated Health Services


, which also loaned its execs money to buy its stock. The loan plan is detailed in the company's proxy. Several months ago, Integrated insiders were buying stock with money borrowed from the company. At the time, the stock was trading between 4 and 6, and Integrated's junk bonds were trading in the 60s. "Now," Meng muses, "the stock is virtually worthless and the junk is offered at 14 cents on the dollar. By the way, their stock-repurchase loans are scheduled to be forgiven by the company." How comforting!

Chainsaw Massacre:

John Byrne's


the story of

Al Dunlap

and his days at



, should be required reading in all business and accounting schools and by anybody who ever wonders why this column is usually looking for the other side of Wall Street's bullish story. (The book won't be available in stores until the end of October.) Sunbeam is

no stranger to this column; its accounting raised red flags throughout the short-selling community while Dunlap was touting himself as the answer to corporate America's shortcomings.

Of course, at the time nobody could prove what the shorts were alleging. But numbers generally don't lie, and what Byrne, who writes for

Business Week

, does so well is offer the proof by taking readers inside the offices, homes and minds of Sunbeam execs as they devised the plans that eventually pulled the wool over most of Wall Street's eyes. (And if you think the way Dunlap treated his employees was callous, wait'll you see how he treated his only child!)

Sorry for the brevity -- some days are like that.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.