Abelson could move stock prices

The writer who critiqued Wall Street and companies the most during the last 30 years of the 20th century was Alan Abelson of Barron’s, whose death at age 87 was announced on Thursday.

While the stock market rose to new heights for most of the 1990s, Abelson criticized the run-up on almost a weekly basis. Unfortunately, many investors ignored his rants.

For example, he wrote this about IBM investors in December 1992: “By our crude reckoning, these hapless souls have lost something over $28 billion this year, and of course, neither the year not possibly the damage is over. Contrast that to the $16 billion estimated cost of Hurricane Andrew, and the case for an official designation of IBM as a disaster area seems unanswerably compelling.”

A critical word from Abelson punctured more than one financial bubble, and cause stocks to rise with a kind word. His reputation of discovering scams and finding the truth on Wall Street is legendary. After his “Up and Down Wall Street” column lauded SEEC, which developed software to maintain computer systems, the stock rose 52 percent in one day in November 1998. And after he criticized PMT Services Inc., in consecutive issues of Barron’s in 1996, the company put out a press release to dispute his assertions in an attempt to keep the stock from falling.

It didn’t work.

Even as far back as the 1970s, Abelson drew the ire of hedge funds before their operations and tactics became commonly known on Wall Street and to the investing public. Many hedge funds short stocks, meaning they believe they will fall in price, not rise. A lawsuit brought by a Technicare Corp. shareholder accused Abelson of providing tips to these short sellers in advance of negative articles about companies.

Abelson denied the charges, which were never proven. “Back in the 1960s, people used to threaten to punch me in the nose when I said something negative about a company,” responded Abelson. “Now we live in different times. The suit is obviously an attempt to keep me quiet.”

Keeping Abelson – and other critical watchers of Wall Street – quiet has been hard for anybody to accomplish. Their reporting on the financial markets has brought to light illegal dealings, dozens of shady stock propositions and countless scam artists. Their work is respected by the scrupulous operators on Wall Street for acting as a semi-regulatory body.

With their writing, they sometimes alert federal regulators at the Securities and Exchange Commission to potential transgressions. They sell newspapers and attract viewers to their media outlets. This reporting is what the quid pro quo should be for readers, viewers and listeners who often are investors.

I do not see anyone currently in business journalism who can skewer companies the way Abelson did. He will be missed.