Confessions of a Wall Street Analyst Read Online Free PDF Page B

did have some advantages, one of which was its location onthe company’s executive floor. I figured I’d have a lot more interaction with the top brass and in the process learn a lot about how a rapidly growing company is managed.
    In early 1987, it was also a tougher job than it had been. In December 1986, MCI had taken a huge write-off and the stock had crashed from over $20 to under $5 per share after a disastrous acquisition of a satellite company. Investors had lost enormous amounts of money; they felt betrayed and angry. The previous two-person investor relations team had been shunted aside, virtually run out of town by rabid institutional investors seeking vengeance. Though they clearly were not responsible for the company’s misfortunes, many professional investors felt that the previous team had spun a misleadingly bullish story just as that acquisition was going south. So, at this point, the investor relations job was more about damage control and reestablishing the company’s credibility than anything else.
    I was assigned to work with Jim Hayter, a tall, lanky regulatory troubleshooter who started in 1972 as MCI’s 85th employee. Jim was a true extrovert; he loved to interact with people and had an innate ability to find out what makes someone tick. He used self-deprecating humor, a beguiling yet devious smile, and a deep-throated, sometimes-forced laugh to disarm people. He had a way with the ladies too.
    We made a great tag team: I taught Jim the ins and outs of financial analysis and forecasting, and he taught me about regulation and market psychology. Coming from within the bowels of the company’s financial organization, I had good knowledge of what internal factors drove the company’s future, and I also had solid sources inside MCI’s financial, marketing, and engineering organizations. They gave me credibility with Jim and, more important, with Wall Streeters as well.
    We divided up the analysts we’d each handle, more by personality type than anything else. As the stoic member of this dynamic duo, I dealt with the more analytic and empirical analysts, like Ed Greenberg at Morgan Stanley and Robert Morris at Goldman Sachs. Jim got the ones who were more intuitive and, shall we say, emotional. I marshaled facts to explain the merits of MCI’s strategies and earnings prospects, while Jim used psychology to entice investors into buying MCI shares.
    My First Run-in with Jack Grubman
    Jack Grubman was one of those emotional sorts. Jack was a PaineWebber analyst who had left AT&T for the Street in 1984. He was loud, opinionated, and seemed to exaggerate everything in order to make it sound more dramatic. He had a somewhat high-pitched, nasal voice, two large front teeth, and a receding hairline with jet black hair. Most Wall Street analysts were, well, analytic; their reports were as dry as a day-old turkey sandwich. But Jack punctuated his dispatches with the written equivalent of a scream.
    I had met Jack recently when MCI CFO Bill Conway, Jim, and I had done the rounds on Wall Street, visiting with each of the major investment banks’ telecom analysts. Like me, Jack was a bit of a wonk, having studied math as an undergraduate at Boston University (though he claimed his degree was from MIT) and then earning a master’s degree in probability theory from Columbia University. AT&T recruited him into its management training program. After the breakup of AT&T into eight separately traded stocks in 1984, PaineWebber recruited him to be its analyst for the new telecom services sector.
    Jack came to Wall Street with a deep understanding of the regulatory changes underway in the industry, as well as a great background in telecom engineering. He went out of his way to flaunt that engineering knowledge in the reports he wrote. A middle-class guy from Philly, Jack made much of his supposed rough beginnings and loved to remind people that his father had been a boxer and that he, too, liked to box for fun.