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The Art of Ridiculousness
Dear American Capitalist Reader,
My head is spinning. Wall Street and retail investors are (1) not doing any research, (2) listening to talking heads that don’t seem to be doing due diligence, or (3) have selective hearing problems that need to be resolved immediately.
Home Depot made it a point the other day to downplay LBO speculation that has run the stock through the roof. But the Street doesn’t believe it. Instead, the Street finds it necessary to ignore management’s announcement and run the stock on speculation that the LBO could really happen. But it won’t happen. Chairman and CEO Nardelli crushed the rumor and said, “It’s not true.”
According to Briefing.com, the company said, “On an given day we are running numbers on lots of other companies… Somebody is probably running the numbers on us on any given day. It’s an unfortunate distraction.”
The CEO downplayed it. Management isn’t interested in it, but the stock is still moving on the possibility it could happen. The initial rumor, spread successfully by the likes of the New York Post, Dow Jones and CNBC, seems to be bogus.
CNBC and the New York Post, according to Bloomberg.com, cited unidentified people and said Home Depot could be a “potential takeover target for private-equity firms. The New York Post also said, citing unnamed sources, director Greg Brenneman was lobbying the board to consider a buyout.”
For crying out loud, CNBC, according to DealBook at The New York Times’ Web site says, “After stirring up excitement over a possible buyout of Home Depot, CNBC is taking it down a few rungs.” In fact, David Faber is skeptical about any deal, “citing people close to management and on the private equity side who said ‘there’s nothing going on and it’s not going to happen.”
Well, shouldn’t CNBC have confirmed source material before going live with bogus material? How’s that for ethical action? Faber’s comment came a week after another talking head said, in an interview, that “private equity firms were thinking about a takeover of the home-improvement retailer.” The funny thing: Without blinking an eye, the New York Post followed up with a similar story the very next day.
Unbelievable. Yet investors are still ignoring the management and news stories backtracking, and still buying Home Depot on the possibility a deal could really happen. But guess what? It’s not going to happen. Simply amazing…
Take care,
Ian L. Cooper
Editor, Death Cross Trader and Early Alert Trader
