The column I edit, Heard on the Street, has to find one mildly ridiculous business story for each issue of the paper, in addition to all the serious, analytical stuff. This usually isn’t a challenge, though there are occasional droughts when we have to dig deep.
Thank goodness for people like Patrick Byrne, CEO of Overstock.com. He is a gift to seekers of corporate hilarity and I was a bit mean to him today.
Patrick Byrne felt a great disturbance among his shareholders, as if millions of voices suddenly cried out for an explanation. This compelled the chief executive officer of Overstock.com to write one of the more bizarre news releases in recent memory about his reasons for selling 900,000 “founder’s shares” of the retailer. “Frankly, I had no idea that shareholders would demand explanations of why and how I might want to use my cash derived from my labor and my property to pursue my ends in life,” he wrote. Mr. Byrne detailed a number of personal projects, including charitable causes, for which he needed the cash. Even after all these years, he is most famous for a different rant about an alleged conspiracy to damage Overstock’s share price involving a “Sith Lord.” Mr. Byrne backed efforts to expose and punish allegedly manipulative short sellers.
Despite some spikes in the share price, the short sellers were basically right. Since the 2005 “Sith Lord” speech, the stock has dropped by 77% compared with a 133% gain for the S&P 500. Perhaps Mr. Byrne should have directed more energy to running the company. Do or do not. There is no try.
So we decided a year ago to poke some fun at the masters of the universe who unveil their stock picks each year at the Sohn Investment Conference . My team and I decided to throw darts at stock listings and see how things panned out. It was a blowout.
No animals were harmed in this financial experiment, but some human egos were bruised. Burton Malkiel famously wrote in “A Random Walk Down Wall Street” that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by the experts.” A year ago the journalists at Heard on the Street decided to see if they could beat the crème de la crème—fund managers presenting their stock picks at the annual Sohn Conference in New York. The results were brutal. Heard columnists, not monkeys, threw the darts at newspaper stock listings, but Mr. Malkiel would still approve. The columnists’ eight long and two short picks beat the pros’ selections by a stinging 27 percentage points in the year through April 22. Only 3 of 12 of the Sohn picks even outperformed the S&P 500.
The following memo went out today at The Wall Street Journal from finance editor Charles Forelle.
I’m delighted to announce that Spencer Jakab is the new editor of Heard on the Street. Spencer is a rock of the Journal’s financial commentary. He has been deputy editor of Heard since 2015, and he wrote the Ahead of the Tape column for years before that. His knowledge of companies, markets and financial instruments is encyclopedic. (By my Factiva count, Spencer did nearly 800 Tapes in about 45 months; good luck finding a topic in our universe he hasn’t touched.) He is an incisive financial thinker who embodies the Heard’s spirit of smart, provocative and timely analysis. He also writes killer ledes. He’s the ideal leader for our expansion of the Heard. Before the Journal, Spencer worked at the Financial Times and here at Dow Jones Newswires, and was a stock analyst at Credit Suisse. He is the author of “Heads I Win, Tails I Win,” which is, naturally, a book about investing. Spencer’s move means we are looking for a new Heard deputy. Please get in touch with him if you are interested. And please join me in warmly congratulating Spencer. I believe he’llbecelebratingatOlive Garden. -Charles