I founded Wall Street Daily directly in the teeth of one of the scariest times in U.S. history – the Financial Crisis.
The first broadcast was sent to readers on December 3, 2008.
In the days leading up to that inaugural broadcast, the Dow Jones Industrial Average had fallen 2,552 points.
Everyone told me that I was crazy for launching a financial publication during such times.
They told me that the market was dead.
Some were even saying that the Dow could fall all the way to zero!
Well, not only did I send the first article to readers that day, but I even had the nerve to include a “Buy” recommendation on a stock.
We recommended buying shares of greentech company, Met-Pro Corporation.
It was up by double digits almost immediately, and the economic recovery hadn’t even begun yet!
How’d we do it? Solely on the merits of great research…
Met-Pro’s bookings had just hit record levels in the latest quarter, and its market-leading range of pollution-control products were certain to keep the registers ringing, despite the prospect of economic chaos.
Instantly, I had proof that great research trumps all.
And literally hundreds of winning stock recommendations later, Wall Street Daily is now one of the largest financial publications in the world.
Cheaters Never Win…
I told you about the origins of Wall Street Daily to nicely juxtapose a completely opposite story, one that occurred a few blocks away from our Baltimore, Maryland headquarters.
The story is about three buddies who decided to cheat, rather than work hard.
All three attended the U.S. Merchant Marine Academy, which is known for having a rigid code of conduct, and graduating officers who exhibit “exemplary character.” (So much for that, right!?)
The antagonist in this Shakespearean-like tragedy is John Femenia, a former investment banker with Wells Fargo Securities.
Turns out, Femenia is a cheat, who tipped off his buddies about a big takeover in the energy industry.
Although the news wasn’t public yet, Femenia knew that Chicago Bridge & Iron had agreed to buy out its rival, Shaw Group, for $3 billion. (His firm was considering whether to finance the transaction.)
The Two Dumbest People of the Week…
Walter Wagner and Alexander Osborn win the honor for acting on the tip from Femenia.
According to the FBI’s investigation, dubbed “Operation Insider Out,” the two men invested ahead of the takeover news with purchases of both shares and call options.
Seriously, guys? Our analysts here at Wall Street Daily regularly track unusual trading patterns. And if we’re tracking such patterns, you can bet the FBI and SEC do it infinitely better than us.
Yet Wagner and Osborn failed to realize this simple fact…
“Wagner and Osborn had never bought stock or call options in The Shaw Group, yet they suddenly spent significant portions of their available cash resources to make sizeable purchases in the weeks preceding the public announcement of the acquisition,” said William P. Hicks, Associate Director for Enforcement in the SEC’s Atlanta Regional Office.
When the deal was officially announced, Shaw Group’s stock shot 55% higher in a single day.
The tandem collectively pocketed nearly $1 million in profits.
Wagner has agreed to plead guilty to one count of insider-trading conspiracy, and now faces up to five years in prison and a $250,000 fine.
He also agreed to surrender the $517,784 he pocketed by cheating, plus interest.
The SEC’s litigation against Osborn, who pocketed $439,830, continues.
And as for the ring leader, Femenia…
He’s already been barred from the securities industry, but the case against him runs much deeper.
The FBI’s investigation shows that Femenia built an entire network of friends and acquaintances to place profitable trades using his insider information.
The insider-trading scheme netted its participants $11 million.
Bottom line, you get an edge in the market by working your ass off and doing great research. There are never any shortcuts. Trying to anticipate announcements and takeovers is all part of the game. (The critical word being “anticipate.”)
We did it successfully with Met-Pro Corporation. Ironically, Met-Pro was ultimately bought out by CECO Environmental Corp. The deal was valued at approximately $210 million, or $13.75 per share – reflecting a 43% premium to Met-Pro’s share price.
Ahead of the tape,
Founder, Wall Street Daily