Return to Cendant -- An Anniversary Package
A year ago this week, all seemed relatively peaceful on Wall Street. The
Nasdaq
was chugging ahead, the broader indexes
were following. Even the
Russell 2000
was making records.
With simple signals from
Robert Rubin having the bond market rallying atop a strengthening dollar, the most investors had to worry about was the
G7
meeting (yawn) and who would prevail in the
Tom Kurlak
/
Mark Edelstone
battle over the fate of
Intel
(INTC) - Get Report
.
Or so they thought.
On April 15, 1998, after the close,
Cendant
(CD)
informed Wall Street of "potential accounting irregularities" and said it would restate its earnings for 1997 and each quarter of that year. The stock tanked, losing nearly half its value the next day.
While precipitous drops aren't rare in the stock market, Cendant's crash was different. Between mutual funds, hedge funds, 401(k)s and individual brokerage accounts, this stock touched the lion's share of the American investing populace. Its fierce decline showed the dark side of group-think on Wall Street and raised critical issues about accounting practices that continue to reverberate today.
This week, in a special three-day package, Return to Cendant,
TheStreet.com
explores how the debacle has affected Wall Street, corporate America and individual investors.
Wednesday, Senior Writer
Justin Lahart
provides a
postmortem of the event, reporting on how analysts and money managers still regard the company with a wary eye. Contributing Editor
Jim Cramer
, who was long the stock back then -- very long -- opens a
vein and relives his personal Cendant experience.
Contributing Editor
Jeff Bronchick
, a.k.a. the Buysider, wrote about Cendant for
TSC
a year ago. Thursday he
revisits the accounting issues and discusses the effort launched in September by
Arthur Levitt
, chairman of the
Securities & Exchange Commission
, targeting what Levitt called a widespread decline in the quality of accounting by U.S. companies.
Institutions aren't the only ones still dealing with the Cendant plummet. Plenty of regular folks who invested in the stock continue to feel the loss. Thursday Senior Writer
Alison Moore
talks with individual Cendant investors about how they're faring.
Friday's coverage focuses on Wall Street pros and their issues with the stock. Senior Writer
Suzanne Kapner
describes how Cendant is now viewed by the analyst and brokerage community that took the heat a year ago for pushing the stock. And in the Lessons Not Learned Department, Associate Editor
Dan Colarusso
reports how Wall Street continues to moon over charismatic corporate leaders -- even after their failed romance with Cendant's most compelling asset, Chairman
Henry Silverman
.
We conclude Friday with a corporate focus by Staff Reporter
Katie Hobson
. Like a cheating spouse, Cendant is saddled with the task of trying to wend its way back into investors' heart. Hobson examines how the company stacks up today as an investment.
In addition to these writers and editors, credit also goes to
Jacqueline Waters
,
Roger Spence
and
Paula Wood
for providing graphics and Staff Reporter
George Mannes
for critical additional reporting.
We'd love to hear your thoughts on Cendant; send email, with your full name, to
letters@thestreet.com.
A final note: While hindsight is 20/20, it turns out that sometimes foresight is pretty clear too. Editor-in-Chief
Dave Kansas
wrote this small
item last year on March 20, about a month before the event:
Interesting Short: Some traders say they are gingerly looking at short positions on Cendant, a hot consumer products and marketing company. For one, Cendant paid dearly for American Bankers, whipping AIG in a bidding battle. Second, and perhaps more importantly, AIG Chairman Maurice Greenberg is one tough and nasty hombre. Bad guy to tick off, one hedge fund manager says. Given recent reports that fund companies such as Janus are growing quickly enamored with Cendant, one scenario is likely: Cendant is about to become a nasty battleground between shorts and longs. Get out the accounting ledgers.
