Saturday, July 11, 2015

Nasdaq Surge Lifts Internet Boosters of the Past

The dot-com people are back. Aivars Lode avantce

Nasdaq Surge Lifts Internet Boosters of the Past 

Mary Meeker, Henry Blodget, Frank Quattrone Enjoy Revival

By Maureen Farrell
On a wintery Thursday, Mary Meeker stood on the floor at the New York Stock Exchange celebrating the listing of Lending Club Corp., a peer-to-peer lending firm she helped nurture to the public boards.
That same morning, Henry Blodget was a guest on business television, offering up his views on the future of the Internet and the latest hot Web stocks.
Across the country, Frank Quattrone and his team had just closed one of the biggest deals in his advisory firm’s history, the $8.3 billion acquisition by SAP SE of Concur Technologies.
What sounds like a scene from 1999, the heyday of the Internet boom, actually played out just this winter.
Fifteen years after the implosion of the bubble—and the ensuing public pillorying of high-profile Wall Street names—technology stocks are back.
And so are many of their original cheerleaders.
Ms. Meeker and Messrs. Blodget and Quattrone are three names inextricably linked to the technology boom of the late 1990s. In some ways, their careers, while diverging, have followed the trajectory of the Nasdaq Composite Index, which peaked in March 2000, then cratered to its postbubble nadir in October 2002, before beginning a slow but volatile ascent to record levels on Thursday.
“They were spokespeople for [the Internet] movement,” said Steve Case,former chairman of AOL Time Warner Inc. “People thought they were brilliant when stocks were going up and not so brilliant when stocks were going down.”
Mr. Case said he is “not surprised that they are still standing and indeed thriving.”
Many others across Wall Street found themselves caught up in the hype. And few saw the carnage to come.
“These were fundamentally really bright people who knew how to write and explain companies and what technology would do to the marketplace,” said Eric Dinallo, who worked under then-New York Attorney General Eliot Spitzeron the investigation and prosecution of Wall Street analysts. Mr. Dinallo is now a partner at the law firm Debevoise & Plimpton LLP, said. The regulators’ opinion “was that they were engaged in a structure that left a lot to be desired as far as transparency and conflicts of interest.”
Some of them disappeared from the limelight for years and then returned, some have kept low profiles, while some have remained in prominent positions. Here is a look at what some people, once synonymous with the Internet boom, are doing now:
Henry Blodget
Mr. Blodget first generated intrigue and applause for his call on Amazon.comInc. in late 1998. While then working as an analyst for CIBC World Markets, Mr. Blodget put what was considered an outlandish $400 target on’s stock, which was then trading at $230. Within weeks, Amazon’s stock hit Mr. Blodget’s target and surpassed it.
Mr. Blodget reached fame as Merrill Lynch & Co.’s Internet analyst, helping champion companies like Webvan Group Inc. and eToys Inc. He was later fined and banned from the securities industry for publicly telling investors to buy stocks while privately criticizing them. In 2007, he started Business Insider, a business-news website that has grown rapidly and raised almost $60 million in funding. As Internet stocks have staged a renaissance, he has become a ubiquitous commentator on television and online.
Mr. Blodget didn’t comment for this article.
Frank Quattrone
It once again pays to be a friend of Frank.
Since he opened his new advisory firm, Qatalyst Partners, dozens of tech executives and partners at investing firms can thank Mr. Quattrone and the firm, where he serves as chief executive, for helping raise millions of dollars. In the past year, Qatalyst advised MyFitnessPal on its $475 million sale to Under Armour Inc.; Concur Technologies on its sale to SAP; and the video site Twitch Interactive Inc. on its $970 million sale to
At the peak of the boom, Mr. Quattrone, then at Credit Suisse, was the most influential technology banker in Silicon Valley, receiving a $120 million pay package in 2000. But his career ground to a halt after the bubble burst, and Mr. Quattrone was convicted of trying to obstruct a regulatory probe into alleged abuses at the bank.
That decision was later overturned on appeal and the charges were dropped.
In 2008, he started Qatalyst Partners.
Representatives for Qatalyst and Mr. Quattrone declined to comment.
Mary Meeker
Unlike Messrs. Quattrone and Blodget, Ms. Meeker wasn’t forced to defend her behavior in court and held onto her job.
Still, critics said she gave some Internet stocks positive ratings to help Morgan Stanley land banking business, but she was never charged with doing so and has denied that her objectivity was compromised. As Internet stocks cratered in 2000 and 2001, she held onto her buy ratings on a host of stocks that ran into the ground. Some, like, have since rebounded.
In the late 1990s, a buy rating from Ms. Meeker was seen as the ultimate seal of approval on technology stocks, and investors also hung on her macro views on the industry. Her 1995 research report for Morgan Stanley, “the Internet Report,” was turned into a book that became a best-seller.
While still heavily involved in Silicon Valley, she wields less influence. In an email, Ms. Meeker said “the race is won by those that build platforms and drive free cash flow over the long-term (a decade or more). That was my view in 1990, 1995, 2000, 2005, 2010, and it remains the same today.”
Jack Grubman
Another former star of the dot-com era had a swift fall from grace but hasn’t returned to prominence in the investing world. 
During the height of Nasdaq’s previous boom, Jack Grubman was the star telecom-research analyst at what was then Salomon Smith Barney and is now part of Citigroup Inc. Mr. Grubman was banned from the securities industry for life by the SEC in 2003 for allegedly providing misleading research, and he paid $15 million in fines.
Shortly thereafter, Mr. Grubman founded Magee Group LLC, a consulting firm for telecom and technology companies, and while it is possible to find his “industry insights” on his website, he has landed few customers.
Mr. Grubman said in a statement his small customer base is by design. “I purposely did not want to build a big infrastructure to service the masses. I don’t need the money, so am not chasing every last buck but rather situations which are interesting.”
Ryan Jacob
Ryan Jacob had star power in the late 1990s. The fund he ran for Kinetics Mutual Funds was simply and aptly named The Internet Fund. 
Mr. Jacob appeared frequently as a commentator on soaring tech stocks.After taking over the fund in 1997, Mr. Jacob generated a return of more than 200%, assets under management swelled to over $1 billion from $22.2 million the year before.
Later that year, Mr. Jacob launched his own fund, the Jacob Internet Fund. His timing, like that of many others, was off. The fund fell 79% in 2000 and 56% in 2001. 
“I look at that boom-bust period as being pretty difficult as we saw extremes on both sides that we’ll never see again in our lifetimes,” he said. 
Like the Nasdaq, the Jacob Internet Fund has made a comeback, returning nearly 11% on an annualized basis over the past 10 years.
Mr. Jacob still serves as chairman and chief investment officer at Jacob Asset Management, with roughly $120 million in assets. “I’m proud that we’ve been able to diversify and grow the firm and basically take it back from the ashes.”

No comments:

Post a Comment