A Personal Take on Respronics

Dec. 6.06 | About: Respironics Inc. (RESP)

Eddy Elfenbein submits: Many years ago, when I got my first job in finance, I worked for a sleazy brokerage firm in Boston. This place was truly rock bottom. I was just out of school and it was the only job I could get. This firm made the Boiler Room look like Goldman Sachs.

All day long, I cold called people in and around Boston. I guess with the advent of cell phones, cold calling has gone away. But that’s all I had to go on. I didn’t even have my own desk. Several of us where bunch around a table loaded with phones, and we had stacks of Boston white pages. Even thinking about this is giving me the chills.

The place was more like a frat house than a place of business. I finally had enough so I applied for a job in the research department. The head of the department told me to write a report on Respironics (RESP). So I got to work. I collected everything on the company I could find. I read up on sleep apnea. I read all of the company’s SEC filings. I read other companies reports. For several days, I did nothing but eat and sleep Respironics.

When I finally wrote my report, I came to the conclusion that Resprionics’ stock was fairly valued. That was my big mistake. Well, I was right—the stock was fairly valued. But I soon learned that it was research director’s absolute most favorite stock in the whole wide world. As you can imagine, he hated my report and I didn’t get the job.

So much for open-minded Wall Street research.

Ever since then, Respironics has had a special place in my heart. After I wrote my report, the stock flatlined for several months. Just as I though, it was fairly valued. But in the long run, the research director was right, it’s been a very good stock.

For the past year, however, Respironics hasn’t done much. Here’s a look at the company’s performance: