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RedChip's long history of success includes the first to issue independent research coverage on Starbucks in 1992. Other names RedChip discovered as they were on the cusp of becoming Blue-Chip stocks were: Nike™, MarketWatch.com™, Daktronics™. Over the years, RedChip has evolved into a... More
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  • CNBC’s Irresponsible Innuendo  6 comments
    Jan 13, 2011 11:03 AM
     On January 11, 2010 Dave Gentry, President of RedChip Companies, Inc.appeared on CNBC’s The Strategy Session, a daytime TV program whose stated goal is to “provide you with an insider’s look at how capital is allocated” and “figure out what the truth is.”

    Hosts David Faber and Gary Kaminsky, aided by contributor Herb Greenberg, mobbed Dave Gentry in a 3-on-1 attack in a segment titled “Peddling Chinese Reverse Mergers.”  During this interview, RedChip’s nearly 20-year history of publishing equity research was challenged as biased and hype. When Dave responded that our reports are written by CFA’s (Chartered Financial Analysts), Mr. Greenberg attempted to dismiss this fact by erroneously reporting that we had the business description of one of our clients wrong on our website.  We in fact had the client’s business description correct, and Herb later corrected himself on a follow-up “bonus” segment titled “Faceoff: Heat Over Chinese Reverse Mergers,” which was taped later that day at CNBC studios and released on CNBC.com.

    In response to the attack by Mr. Faber, Mr. Kaminsky, and Mr. Greenberg on RedChip Research, RedChip analyst and portfolio manager Bill Matson, CPA, CFA composed the following e-mail:

    Dear Mr. Greenberg and Mr. Faber,

    CPA firms get paid for their opinions by the companies on whom they report, so why shouldn’t investor relations firms who employ CFA charterholders to render opinions? Especially when all compensation arrangements are fully disclosed.

    I can honestly say that nobody at RedChip has ever tried to get me to be anything but 100% objective in my research – nor would such attempts ever have a snowball’s chance in hell of meeting with success. To imply that the RedChip business model compromises my work or that of the other CFA charterholders who create RedChip Research is to denigrate the CFA qualification itself, as well as the rigid ethical code at its foundation. We all worked very hard for the right to put those three letters after our names.

    Am I being hypersensitive about this? I don’t think so. If RedChip is guilty of publishing tainted reports, its analysts must also be tainted. My name is on those reports, as well as on the RedChip web site. In no way can this possibly be good for my reputation or my money management firm’s business.

    I wonder if you people at CNBC have any appreciation of the harm you cause when you attempt to create the illusion of scandal where none exists – and fail to give your guests anything resembling a fair opportunity to respond to your innuendo. Aside from slinging unwarranted mud at RedChip and ignoring the existence of the CFA Code of Ethics, to which over 100,000 professionals are bound, you are discouraging small companies from making themselves known to investors, both retail and institutional.

    This ultimately winds up being a grave disservice to CNBC’s viewers. I’ve been one of your most loyal viewers since 2000, when I became a full-time investor/portfolio manager. In fact, my book,Data Driven Investing, devotes several pages (starting on pg. 349) to techniques for acting upon the information to be gleaned from CNBC. Yet I can’t recall anything more than passing mention ever being made on CNBC of microcaps’ tremendous long-term performance advantage over large caps. Your party line is that this has been “a lost decade” for stocks, but one wouldn’t know it from looking at the Russell Microcap Index (up 81% since 6/30/00). While I respect CNBC’s reluctance to avoid mention of specific thinly traded stocks, I find it disturbing that you would not only ignore the outperformance of microcaps, but also take actions, such as your irresponsible treatment of RedChip, that are likely to steer would-be investors away from small companies.

    Small companies are important sources of job creation and innovation, and many have been starved for capital due to troubles in the banking system. It is particularly irresponsible at this time to question legitimacy without basis an effective means of channeling objective analysis of these companies to investors who are likely to benefit from this information.

    Bill Matson, CFA, CPA

    Analyst, RedChip Companies, Inc.



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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Comments (6)
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  • Dave "used car salesman" Gentry got his lunch handed to him on CNBC, as Dave thought his ridiculous approach would work. Geez, talk about his strategy backfiring. Wow !! Rather than Dave immediately taking shots at Herb Greenberg, which resulted in a quick 3 on 1, he should have focused on the incredible value that China small-cap stocks offer. Why on earth would Dave start talking about Starbucks, especially when no one at RedChip today had anything to do with an event from twenty years back ? The real problem here is that Dave Gentry is by far the wrong person to try and bring credibility into the China small-cap world. The most popular China small-cap forum on planet earth (CGS on IHUB) repeatedly shakes their head in dismay at Dave Gentry and how he portrays himself and RedChip. I mean seriously, Dave calls me the other day to tout CECX and I had to inform him that CECX can't even be bought through Ameritrade. LOL. As if I ever want to buy a total P.O.S. stock that Ameritrade refuses to even allow trading in. Good grief ! I must also laugh at how RedChip lowered the PPS target of LLEN from $19.50 to $17.00 the morning of Dave's appearance on CNBC, certainly not a coincidence and obviously done to try and show CNBC how unbiased Red Chip is, even towards their own clients. What a joke.
    13 Jan 2011, 11:49 AM Reply Like
  • The CNBC only touched the surface with Gentry and Red Chip. I listen to the show daily as KFNN is a great financial station that welcome input from their listeners if false exaggerations are claimed. I wrote Gentry to point out the performance claims made by their "voice", Gary McKenzie could be destroyed by a grammar school child with crayon's. I offered to sign a NDA to prepare a professional measurement of their highlighted stocks to determine if their was some sort of statistical strategy could be developed to identify their high flyers as their claims omit the submarine stocks; still waiting for a response. John Rousseau
    13 Jan 2011, 07:58 PM Reply Like
  • Stock promoters are simply that promoters. Calling themselves analysts doesnt change what they do.
    19 Jan 2011, 12:12 PM Reply Like
  • Author’s reply » Refering to Bill Matson, who is a CFA, CPA and holds a Harvard MBA as a stock promoter is laughable.

     

    I find it ammusing CRAVATES that you have posted 3 comments in your history with seeking alpha. Two of which pertain to Dave Gentry's appearance on CNBC.

     

    I wonder what your motives could be.
    20 Jan 2011, 02:13 PM Reply Like
  • Folks, I track all red chip stocks daily and am developing a statistical model to develop a strategy to make money from the propaganda. Mr. Gentry has been responsive to "little old me" but has yet accepted my offer to redesign their website to show all performances rather than the huge successes they should be commended for as should their clients. Their mis is displayed for sensationalism which I understand but do not accept as meaningful to investing successfully. When I finish the study, I may sell to interested investors once my strategy is constantly successful. I listen every day and the disclosures and silly claims have been much more restrained which is why I continue to listen and take advantage of their hard work. KFNN in Phoenix is the station which I listen to daily and am equally critical or supportive which the shows earn. It is a great world.
    31 Jan 2011, 10:00 PM Reply Like
  • collection guru, you have somewhere I could email you?
    14 Apr 2011, 04:27 PM Reply Like
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