The Sell Side: Joe Herrick, Gutterman Research

by Mr Juggles

Over the weekend, the WSJ had this article on earnings calls being crashed by faux-analyst Joe Herrick.

At least seven times just the past three weeks, a mystery caller has cleverly insinuated himself into the normally well-manicured ritual of the quarterly calls. As top executives of publicly traded companies respond to securities analysts’ questions about their balance sheets, he impersonates a well-known analyst to get called upon. Then, usually declaring himself to be “Joe Herrick of Gutterman Research,” he launches into his own version of analyst-speak.

“Congratulations on the solid numbers — you always seem to come through in challenging times,” he said to Leo Kiely, president and chief executive officer of Molson Coors Brewing Co., on Feb. 12, convincingly parroting the obsequious banter common to the calls. “Can you provide some more color as to what you are doing for your supply chain initiatives to reduce manufacturing costs per hectoliter, as you originally promised $150 million in synergy or savings to decrease working capital?”

Analysts say the caller’s questions, though credibly phrased, are too off-target for a real analyst. It’s more like “consultant-speak,” says a disdainful Bryan Spillane, a Banc of America Securities analyst, a victim of one of Mr. Herrick’s impersonations. Analysts deal with often-wonky financial details, but “savings per hectoliter” rarely comes up.

Mr. Schmitz[, a sell-side analyst,] speculates that Mr. Herrick is “some minion” at a consulting firm trying to do clandestine research on companies’ use of Six Sigma techniques.

Coke’s caution was evident when Banc of America’s Mr. Spillane, the earlier impersonation victim, posed a detailed question about how much of the company’s currency-neutral operating profit growth was organic rather than coming from acquisitions or cost savings. “We hesitated on you for a minute because as we take these questions we are just trying to make sure that in fact you are who you say you are,” Coke’s chief financial officer, Gary Fayard, said before launching into an answer. “I am the real deal,” Mr. Spillane replied.

Recommendation: Beside multiple digs at consultants by sell-side analysts (Spanish Editor’s Note: che absurdo¿!), the best part is that Joe Herrick asked questions that many companies tried to answer because, well, they were the same kind of inane crap questions that they EXPECT from your typical sell-side analyst. Short the sell-side. Additionally, we are initiating coverage on Gutterman Research at a solid “Do Not Buy“.

HT to Terry

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  1. Joe Herrick of Gutterman Research
    February 19th, 2008 | 9:11 am

    I see you are initiating coverage on Gutterman Research and I was wondering if you could shed some light on some of their data about their time wasted per call and food consumed (per kg) per analyst luncheon over asinine question per minute(YoY)?

  2. _Fooled by Randomness_, p. 72
    February 19th, 2008 | 1:18 pm

    Turing test:
    a human judge engages in a natural language conversation with one human and one machine, each of which try to appear human; if the judge cannot reliably tell which is which, then the machine is said to pass the test.

    Gutterman test:
    a human judge engages in a natural language conversation with one sell side analyst and one unhinged lunatic, each of which try to appear as a sell-side analyst; if the judge cannot reliably tell which is which, then the actual analyst is said to fail the test.

  3. Anal_yst
    February 19th, 2008 | 5:27 pm

    @ #2 above

    Lord-Cayne test:

    If the CEO/CFO/etcO engages in a supposedly natural, formal language conversation with sell-side analysts, but peaces out before a)any analyst can actually query the CEO/CFO/etcO to determine if he/she is actually in the room/paying attention/sober, or b)politely ending the conference call in accordance with commonly accepted business practice, then the actual CEO/CFO/etcO is said to fail the test.

  4. coop
    February 19th, 2008 | 11:04 pm

    your commenting format bores me… you both fail

  5. Cletus
    February 20th, 2008 | 1:27 pm

    When I read this post, I thought, “55555 5555 5555555. 5555? 555!”