Wednesday, August 20, 2008

CNBC Runs a Favorable Investment Opinion Piece on Schering-Plough -- Quoting A Fifth-Third Fund "Portfolio Manager" -- but fails to disclose. . . .


I am not certain that these two are affiliates, but it certainly seems likely. . . .

Earlier today, a Fifth Third Disciplined Investment Fund "Portfolio Manager" named Scott Richter said he "likes" Schering-Plough's management, in this CNBC piece. Okay. Take a deep breath, now. That's right -- he is basing his favorable commentary on the strength of Schering-Plough's "management". R-i-i-i-i-i-ght.

Obviously, that struck me as a very unusual thing to say, given what we all now know. So I set out to do some digging.

When CNBC first ran this pro-Schering piece, it indicated that "disclosure information was not available for Richter, or for his company. . . ." [Emphasis supplied.]

Not so. See the SEC website. Richter was the person quoted, on behalf of the entity -- the Fifth Third Fund (presumably, some investment vehicle-affiliiate of the Fifth-Third banking entities). As a threshold matter -- why would CNBC run the piece, then? Forget the SEC rules requiring such disclosures (of "portfolio managers" making public comments), for a minute -- isn't that a Journalism 101 question: "What is your stake, if any, in the company you are touting?"

In any event, we find this, over at the SEC -- look at the following alphabetical listing -- of holdings by Fith Third Asset Management, presumably an affiliate of that firm's Disciplined Investment Fund:

SCHERING-PLOUGH

Quarter Ended June 30, 2008

$29,315,000 Value

1,488,826 Shares

Sole Investing Decision Authority;
Sole Voting Authority on all.

~~~~~~~~~~~~~~~~~~~~

Quarter Ended March 31, 2008

$1,190,000 Value

82,551 Shares

Sole Investing Decision Authority;
Sole Voting Authority on all.


Fascinating. Fifth Third entities acquired just over 1.1 million shares between March 31 and June 30, 2008 -- in the most-recent quarter. Moreover, the March 31, 2008 shares carry an average value of $14.41 per share -- and the June 30, 2008 shares show an average per share value of $19.69. Do you think Fifth Third is motivated to see Schering stay above $20 per share? I do. And that, my friends, is material information.

[DELETION -- 09.16.08]

It would seem that Fifth-Third might have over $29 million reasons to want to see this stock rise. . . . but citing "management strength" might be the least convincing one of all.

[CORRECTED: 09.16.08 9 AM:

Now — John Puskar, in a comment to the back up site, on wordpress — informs me that I was wrong about which Scott Richter this involves. My most sincere apologies. The story is accurate; I have the wrong Scott. A different Scott Richter was the Fifth Third analyst, so I've removed the matter that used to appear below, and put it in a comment -- the text is there to preserve the record, just to be clear. Again, my apologies. -- Condor]

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Condor said...

Correction of 09.16.08

See revised story, above. Deleted matter:

Now -- could this be the same Scott A. Richter who was recently with ThinkEquity Partners? I am unsure (but there is a picture of him, there):

". . . .Scott recently joined ThinkEquity Partners as a Vice President and Research Analyst focused on the Infrastructure Management Software sector. Scott joined Think Equity from CIBC World Markets, where he was a Director in Equity Research covering the Communications & Security Software industries. Prior to joining CIBC in 2000, Scott was an Associate Research Analyst with Preferred Capital Market, working with three other analysts covering Compound Semiconductors, Display Technologies, Multimedia and Enterprise Software Industries. Scott is a Chartered Financial Analyst and received his B.A. in Finance from the University of San Francisco. . . ."