In light of the BankAtlantic (BBX) vs. Dick Bove lawsuit, I decided to have some fun and dig around the Internet to see if I could find any stories over the past few years where BankAtlantic may have received some positive speculation about their stock by an analyst or the media. Since the stories would be old, we have the chance to use hindsight and find out whether the analyst was right or wrong. After all, BankAtlantic is apparently suing Bove because they said he was wrong and he refused to adopt their opinion and “correct” his view to match their own. So it appears that accuracy of analyst speculation is very important to BankAtlantic.
After a few seconds, a Google search provided a few old stories to evaluate (provided after this paragraph). When you read the following links, ask yourself whether the analyst was correct that BankAtlantic would be a good M&A candidate. Just look at the actual results and the positioning of their operations in the few years that have passed. I think it is safe to say that the analyst would have had a belief that the bank was sound back then and didn’t suggest that they would be where they are today. Was he right? Remember BankAtlantic is upset enough about an analyst being wrong that it is willing to sue:
Did BankAtlantic sue anyone when there were rumors that they were going to be acquired or merged? I looked and could not find any mention of the bank suing the analyst, can you?
When a rumor is supportive to stock prices, it seems that it is very convenient for a company to make itself unavailable for comment or to just say “We don’t comment on rumors”. Those seem to be acceptable actions as long as those rumors pump up the stock price. I have never seen a company sue to stop wrong speculation when it helps the stock. No surprise there!
I realize there is a difference between speculating about who might go the way of IndyMac and who might be acquired. It’s a big difference. It’s a difference between stocks going up on speculation which most people seem to love and have no problem with versus stocks going down on speculation which people seem to hate and are willing to fight. It’s part of human nature I guess. It’s part of human nature to be hypocritical. If the issue for BankAtlantic management is the accuracy of an analyst, then I suggest their prior actions with regards to analysts that were wrong are relevant. Has an analyst ever been wrong about BankAtlantic? Does it matter what the analyst is wrong about? Does it matter if the analyst being wrong makes the company look good or makes it look bad? Did they ever sue an analyst before?
Where do we draw the line with analysts? If being wrong is the standard, there will be a ton of lawsuits. What if a company doesn’t like the analyst’s downgrade? Sue? What if a company thinks the analyst’s price target is too low? Sue? What if a company thinks the analyst’s estimate is too low? Sue? Would they sue for an upgrade, a ridiculously high price target, or an estimate they didn’t like if those things made the stock go up or made the company look good even though management knew it was wrong?