I didn't intend go "W-ENE, all Enron, all the time" on our readers so this will be the last post on the topic. [today -ed]
An homage to one of the best pieces of financial journalism of the last decade, Bethany Maclean's Enron blockbuster titled with childlike simplicity "Is Enron Overpriced?".
Originally posted November 14, 2007
Wall Street Learned the Lessons of Enron (Unfortunately)
By now, Climateer Investing's loyal and long-suffering readers know of my morbid fascination with stock frauds in general, and Enron in particular. One of the earliest* looks at this perversion of capitalism and markets was:
Is Enron Overpriced?
It's in a bunch of complex businesses.
Its financial statements are nearly impenetrable.
So why is Enron trading at such a huge multiple?
By Bethany McLean
March 5, 2001
NEW YORK (FORTUNE) -- In Hollywood parlance, the "It Girl" is someone who commands the spotlight at any given moment -- you know, like Jennifer Lopez or Kate Hudson. Wall Street is a far less glitzy place, but there's still such a thing as an "It Stock." Right now, that title belongs to Enron, the Houston energy giant. While tech stocks were bombing at the box office last year, fans couldn't get enough of Enron, whose shares returned 89%. By almost every measure, the company turned in a virtuoso performance: Earnings increased 25%, and revenues more than doubled, to over $100 billion. Not surprisingly, the critics are gushing. "Enron has built unique and, in our view, extraordinary franchises in several business units in very large markets," says Goldman Sachs analyst David Fleischer....MORENow Bethany is back with
Uh-oh. It's Enron all over again
Here's a nice characterization
But no one wants to remember two simple rules -- some things are too good to be true, and be wary of Wall Streeters bearing gifts -- when everyone seems to be making so much money. And the collateral damage always hits the true innocents, such as gas pipeline workers and homeowners....MORE*For the record, Fortune gave Enron its "America's Most Innovative Company" Award for six straight years, 1996-2001 and and as of August 14, 2001 was tipping ENE as one of the "Ten Growth Stocks to Last the Decade". Enron filed its bankruptcy petition December 2, 2001.
economicprincipals.com has some of the history of the journalists who worked the story: