Saturday, November 22, 2008
Being Right Doesn't Guarantee A Paycheck
William Tanona was Goldman's banking/investment banking analyst. He burst onto the scene about a year ago with a very bearish report on Citigroup. The market sold off December 27, 2007 a couple hundred points. Many bubbleheads blamed Mr. Tanona. His over-the-top bearish report proved to be 100% accurate shortly thereafter. Instantly, William Tanona vaulted to the top as a *credible analyst*.
I didn't blame Tanona for that little sell-off - I praised him. I was short that day and made a bundle.
So why did Goldman Sachs layoff a star analyst? All we can muster for a reason is conjecture. He could have just been caught up in the firm-wide layoffs. He could have been *overpaid*. Who knows what really happened?
One possibility, could be the firm's perception Tanona got lucky with his short calls on the investment banks. He did wax bullish on Morgan Stanley around May(?). Or he could have just not been *in* with the higher-ups. It wouldn't be the first time Billy got screwed. Despite being 6'8 he got cut from our high school basketball team I believe sophomore and junior years. The coach felt compelled to put him on the team senior year but that's it; he got no run. Billy then walked on the team at Villanova. How many guys can walk on a Big East basketball team but couldn't play in high school?
Another possible reason Billy got the axe is that with the demise of Lehman and Bear Stearns, THERE ARE NO INVESTMENT BANKS LEFT TO ANALYZE.
Yes, you read that right, Billy went to my high school. Haven't seen him in a few years but when I do, I'll buy him a beer - a premium beer - for all the dough he made me last December.
I wouldn't worry for a minute about him finding another lucrative position. Goldman guys land on their feet, every time.
Goldman Sachs traded down to 47.41 this week - a nadir below its 1999 IPO price of $53 a share.
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I was flabbergasted when GS converted to a bank holding company (which required a massive deleverage) and the stock continued to trade above 100 for weeks and weeks. At the time I *arbitrarily* assigned a $50 buy price, but there is still zero transparency as to its current holdings or future earnings potential so I would essentially not buy it at any price until it reports earnings after one quarter of fully delevered operations.
And even when they report earnings....their financial health will still be *foggy*!
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