5. Ventrus Gets Flushed
The 60% drop in shares
on Monday is certainly agonizing for the company's investors but for one Wall Street analyst, it's a huge pain in the ass.
Shares of the biotech plummeted to $5 from $12 on the news that its experimental hemorrhoid drug, titled VEN 309, flunked a costly late-stage trial. According to Ventrus, which went public in December 2010, the highly touted drug failed to adequately stop anal bleeding in its test subjects and therefore the company plans to stop the fiscal bleeding by halting its development.
Now that VEN 309 is history, Ventrus plans to allocate its remaining $31.1 million in cash toward the completion of its drug for anal fissures, named VEN 307, and fecal incontinence.
(Look, we're sorry, but this is what we do. It's what adolescents, frat boys and the Farrelly Brothers do too, but still we have no choice!)
Anyway, of all the analysts who follow the stock, it was
Brean Murray Carret
analyst Jonathan Aschoff (Oh man! Aschoff!?! Lord, please forgive us) who got totally caught with his pants down. Not even two weeks ago, Aschoff initiated coverage of Ventrus with a glowing buy rating and a $30 price target based on his belief that VEN 309 would pass FDA muster and then go on to generate about $1 billion in annual sales at its "peak market penetration."
Sadly, because of the drug's demise, Ventrus investors can forget about that particular penetration. And, as you may have guessed, Aschoff was forced to flush that particular outlook down the you-know-where Monday, lowering his target to $11 soon after the stock hit the fan.
Nevertheless, despite all that's happened, Aschoff is still not giving up hope that someday the shares will indeed turn into shinola. He reiterated his buy rating and told investors to "buy the dip" because he believes VEN 307 has the ability to pick up where VEN 309 left off.
Oh man. We sure do hope his latest call pays off, because right now it doesn't look like he knows his VEN 309 from his elbow.
4. Amylin's Embarrassment
Adam Feuerstein unearthed some real underhanded dealings over at
( AMLN) on Monday. So in case you missed it, here are the despicable, dastardly and oh-so-dumb details.
U.S. Food and Drug Administration
that raised heart safety concerns about its diabetes drug Byetta and then blocked FDA access to the data when the agency discovered its existence, according to recently released FDA records.
And that's not all, says Adam.
Soon after Amylin executives flat-out fibbed to investors by failing to disclose that this hidden Byetta heart-safety study played a key role in the FDA rejecting the company's follow-on diabetes drug Bydureon.
Dudes, that is so dishonest it's disgusting! And what's more is that you did it while trying to unload yourselves to a Big Pharma buyer -- other than
, of course, whose $22 bid you rejected as too low. Well let's see what kind of premium you big shots command now that the FDA has soured on you.
"Our interactions with regulatory agencies have been, and will continue to be, forthright and timely. Throughout the Bydureon review process, Amylin responded appropriately to requests for additional data," said company spokeswoman Alice Izzo Friday in response to questions about the FDA memo.
"Forthright"? Sorry Alice, we saw the report and that's just wrong. And even worse was CEO Dan Bradbury's performance on a conference call in November 2010, a mere two weeks after the FDA rejected Bydureon.
"We do try very hard to be as transparent as possible with everybody about what we know about the business," said Bradbury to an unknowing analyst at the time.
Sorry Dan, but the evidence shows that you weren't transparent in the least back then. And as for right now, well, it's become crystal clear that we can see right through you.
3. Chesapeake's Collusion
! We were worried that the summer doldrums had set in early this year and we would be unable to find enough Dumbest-worthy material to fill our weekly rundown. And then, like the team-player you are, you came to our rescue with this latest headline about colluding with
to hold down land prices.
Oh Aubrey McClendon, how could we ever repay you?
Wait! Don't answer that Aubrey. It's a rhetorical question. We're just joshing you.
That said, we certainly aren't kidding about the allegations made in Monday's
report that you and your Canadian rival schemed in 2010 to avoid bidding against each other in a state auction and in at least nine prospective deals with private land owners.
And apparently your investors don't think it's a joke either since news of the potential price-fixing sent Chesapeake shares down 8.5% Monday, making the scandal-ridden company the market's worst performer. As for Chesapeake's partner in the discussions (We told you Chesapeake is a team player), Encana's stock closed down 4% on an otherwise green day for stocks.
To cut to the chase -- and good old Aubrey sure is getting chased a lot these days -- the most damning email came on June 16, 2010, when McClendon told a Chesapeake deputy that it was time "to smoke a peace pipe" with Encana "if we are bidding each other up."
Forget the peace pipe Aubrey you moron. That's a smoking gun if the government decides to initiate a collusion investigation!
Almost equally idiotic was the Chesapeake vice president who answered Aubrey by saying he had contacted Encana "to discuss how they want to handle the entities we are both working to avoid us bidding each other up in the interim."
To which his boss responded: "Thanks."
No, thank you Aubrey. Like your bosom buddies at Encana, we know we can count on you when we are in desperate need of a very dumb idea.
2. Falcone's Failure
Harbinger Capital founder Phil Falcone once had it all. Too bad he was so full of himself that he failed to spread it around.
Securities and Exchange Commission
initiated a lawsuit against the formerly high-flying hedge fund manager on Wednesday, accusing him of illegally borrowing $113 million in client money to pay personal taxes in 2009.
Falcone is also being sued by the government over a sweetheart deal that allowed
(who else?) to flee his flagging flagship fund while other investors were still locked up, as well as manipulating the prices of distressed high-yield bonds by engaging in an illegal "short squeeze."
"Today's charges read like the final exam in a graduate school course in how to operate a hedge fund unlawfully," said Robert Khuzami, Director of the SEC's Division of Enforcement.
Poor Phil. If only he adhered to the investing adage that diversification is the only free lunch on Wall Street. If he had he might have avoided this sorry situation. Alas, instead of seeing the light, Falcone saw 4G wireless provider
and totally lost it.
And when we say "lost it" we mean both his mind and his money. Not since Klaus Kinski went over the falls in
have we seen such suicidal devotion to a single idea.
Falcone's fanatical wager on the now bankrupt high-speed wireless network wiped out most of his fund's nearly $3 billion investment. Even worse, it caused Falcone to allegedly skirt the law to save his own skin. At last check the fund, which peaked at $26 billion in assets in 2007, was down to $3 billion.
Look, we understand that concentrated bets occasionally payoff. And we also appreciate the fact that most of the world's richest people became that way by betting on their own transformational vision as opposed to the market's conventional wisdom. Heck, that's how Falcone amassed his pile in the first place, by betting big against subprime mortgages before they collapsed.
The very smart ones, however, realize that those once-in-a-lifetime trades are exactly that. Once they make their big score, they check their egos to prevent themselves from giving their winnings back.
The very dumb ones, on the other hand, believe the hype, give it all back and occasionally, like our good friend Phil, get sued by the government for breaking the law.
1. Barclays Gets Busted
A bunch of thieving traders were manipulating the most important benchmark lending rate in the world during the height of the financial crisis. Now they are paying up for their sins -- and their egregious stupidity.
Well, at least their employers are paying up. Those guys cashed out years ago.
agreed Wednesday to pay $453 million in a joint agreement with regulators in the United States and Europe to settle a probe that it profited or curbed losses on trades related to Libor - aka the London Interbank Offered Rate -- which impacts borrowing costs for everyone from homeowners to central bankers from 2005 to 2009.
According to the
U.S. Commodity Futures Trading Commission
, Barclays traders, under the approving eye of the bank's senior management, made artificially low Libor submissions while simultaneously colluding with their equally devious counterparts at other banks.
For example, here is a March 2007 instant message exchange between a pair of traders from separate banks: "this is the way you pull off deals like this chicken, don't talk about it too much, 2 months of preparation ... the trick is you must not do this alone ... this is between you and me but really don't tell ANYBODY."
No, you turkey, the trick is not to get caught and leave a trail of evidence that you are rigging bids.
And here is another choice nugget from March 2006 illustrating the conspiracy theses dunces engaged in: "Dude. I owe you big time! Come over one day after work and I'm opening a bottle of Bollinger."
Hey, there may be no honor among crooks, but at least there is champagne.
As for the guy at the top of Barclays pyramid, well, CEO Bob Diamond said what he was expected to say, apologizing that "some people acted in a manner not consistent with our culture and values." As penance, Diamond, Finance Director Chris Lucas, Chief Operating Officer Jerry del Missier and investment banking boss Rich Ricci agreed to forgo bonuses this year.
Sorry Bob, but it was more than "some" bad apples spoiling the bunch. This was a wide-ranging scheme that will surely grow even wider as more big-name banks settle with the
Department of Justice
in order to put the whole sordid affair behind them. Heads should definitely roll over this, not just bow in regret over getting busted.
And as for your bonus sacrifice, give us a break. We are quite sure you can skate by on your current $6 million base salary and the $23.5 million in compensation you pocketed last year.
Of course, the same probably can't be said for all the struggling homeowners now shelling out higher than necessary mortgage payments each month because of your bank's bad behavior. Nope, those folks aren't skating by at all. Thanks to you and your friends, they are stuck.
Written by Gregg Greenberg in New York
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.