Brokerage analysts are always looking for an edge to show they offer "value-added" information. If you’re not paying strict attention you might think they did. Here’s yet another example of how the cheating occurs.
Sterne, Agee & Leach made a bold call early Wednesday morning. They predicted Jos. A. Bank (
JOSB)'s earnings would rise and they loved the shares at
the current $41.63 price. As Will Shakespeare’s Hamlet once said, “Ay, there’s the rub.”
As it turned out, JOSB had already reported, and Reuters had broadcast JOSB’s much better than expected earnings and same store sales. Their shares were up 13.5% in premarket trading.
JOSB had a gap opening at $48.00 – up $6.37 or 15.3% from Tuesday’s close.
Nobody could buy the stock today at anywhere close to the price where Sterne, Agee & Leach will take credit for putting on their recommendation.Anyone silly enough to act on their research blurb by buying at the open was down 1.17% by 4 p.m.Why did Barron's lend their good name to this deceptive press release?
The day’s range was $47.29 to $49.48 with the intra-day low coming with just minutes to go. The chart speaks for itself.
About the author:
Dr. Paul Price: After college at The American University [BS - 1971] and dental school at University of Pennsylvania [DMD - 1977] Paul served as a dental officer in the United States Air Force both domestically and overseas in Turkey and England.
In 1987 he made a full-time career switch by joining Merrill Lynch.
Over the next 13 years he also worked with A.G. Edwards, Wheat First [now Wachovia Securities], and Ferris, Baker Watts. Dr. Price had enough success to retire in October 2000 but continues to help friends and family with their investments. He continues to give occasional investment seminars for civic groups and business schools.
The Strategy of Ben Graham – Warren Buffett’s Mentor
From 1923 to 1957 Warren Buffett’s mentor, Ben Graham, followed a strategy of investing in net-nets. He said: “It always seemed, and still seems ridiculously simple to say that if one can acquire a diversified group of common stocks at a price less than the...net current assets alone…the results should be quite satisfactory. They were so in our experience, for more than 30 years.”
Today net-nets are rare. They are collected under GuruFocus’ Net-Net Screener. GuruFocus also publishes a monthly newsletter which recommends the safest net-nets. All of these are included in GuruFocus Premium Membership.
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