Every once in a while some sell-side analyst gets to be so good at his job, so powerful, so money-making -- for himself and his clients -- that the
Wall Street Journal
has to nail him in the Heard on the Street column. I saw it happen half a decade ago, to a friend of mine, the hardest working, best tech analyst in the business -- he still is -- and all I could do then was send a letter to the editor saying what an outrage the article was. (He will remain nameless because he is a great guy who doesn't need the incident dredged up again.)
This time it happened to Jack Grubman, the telco analyst from
Salomon Smith Barney
. A clever Heard on the Street column depicted him, with a subtle, non-libelous tone, as an analyst who straddles ethical lines and wears too many hats.
I wanted to puke when I read this piece. Instead, I want to tell you, the readers, the truth about this guy. I couldn't do it a half-dozen years ago, because there was no
. (Heck, it's one of the main reasons I started the darn thing; so there could be a court of appeal where the truth could be told by people who are in the arena.) Now,
exists, and I am not letting this drive-by shooting occur in a vacuum of summary judgment.
First, let me disclose a few things. Jack Grubman has made me money. Before he made me money he made my wife money. He did it by recommending stocks to us that went up. Last I looked, that was his job. Did some of these stocks happen to be investment-banking clients of his firm? Yes. Were some of them not investment-banking clients? Yes. Did he curry favor with managements of companies? Maybe, I don't know. More important, I don't care. He made me money, legally, and honestly, by suggesting stocks that went up. That's his job; he has done it better than almost anyone alive.
Second, Jack's from Philadelphia. That means when I talk to him, I talk about my -- and his -- pathetic
. I talk to him about how the Phils look, whether Iverson's the next Jordan. I plead guilty. Yeah, I just like the guy.
Third, Jack Grubman has isolated every major trend in telco that has occurred in the last 12 years. When
was great he told me to buy it. Last year when
was great, he told me to buy it, and when I was taking a bath in it when it went down, he didn't tell me to boot it, he urged me to double down. When it got even worse, he apologized but said all he could do was tell me to buy more because it was even cheaper. I did; he was right. My firm caught a triple. He kept me in a winner even when the market said it was wrong.
In 1987 Jack told me to go long
and go short
and to cover when they crossed. Take a look at those two charts. This was a call of a lifetime.
In 1988 Jack told me to put my whole fund in
. That was right again. In the 1990s Jack has loved cellular, dissed ISDN, praised independent telcos, blasted the Baby Bells, loved dark fiber plays, hated
and loved, loved loved
. That's batting a thousand where I am from.
Sure he can screw up. He liked
. Took a bath in that one. He doesn't really like AT&T right now. He is looking right; I think he will be wrong. (I am long T.)
But the point of all of this is that Jack Grubman is a force precisely because he has been so right. He is so powerful and paid so well because he has made so much money for his buyside clients. He is hardworking, not flashy and totally committed to being right. He is everything I want in an analyst.
That's why the Heard on the Street's attack was a hatchet job that should be saved for all of the jokers out there who have never made you a dime and are just taking up space mouthing the lines of the companies they speak to. Jack Grubman got attacked because he is so good, so richly and deservedly remunerative, that people are just plain jealous of what he has accomplished. People want Jack to fail.
Okay, so what happens now that I have written this? I guess the press will just assume that Grubman and I have some sort of corrupt bargain, born over a shared Geno's cheese steak. Look, I am a customer of Smith Barney. That's all you need to be to be on Grubman's team. That said, would I take up an offer to go to Geno's -- not the once-great Pat's -- in a second? Of course.
There are so many bad analysts out there, guys who couldn't make you a dime if their lives depended on it, guys who would bury you everyday in the stocks that are investment banking clients. Why doesn't the Heard on the Street go after them?
One thing is for certain. We will never know the answer to that. The dead-tree press thrives on its lack on accountability and interactivity. The stone walls between them and the rest of us are strictly symbolic. It's their holier-than-thou attitude that defines them as publications, and sets them apart from the interactive world of online.
Yeah, I am steamed about this one. Just steamed. Grubman deserved better.
James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long AT&T and MCI WorldCom, although positions can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at