Suing an analyst over a report is akin to blaming the shorts for your stock price: It is a waste of time and corporate resources, a huge distraction to management.
Note the (chart below); our quantitative review of the stock — pure math, no opinions — was a Sell rating back in April.
Even without that system, and without having read the Bove report or BankAtlantic’s complaint, I am deducing a very valuable piece of information from the company from this issue: I don’t want to own BankAtlantic Bancorp (BBX): Their priorities are misplaced, and with the stock at $1.99, they are spending precious capital on nonsense.
Here’s a quick excerpt from WSJ:
BankAtlantic Bancorp Inc. filed a lawsuit against well-known Ladenburg Thalmann analyst Richard Bove and his firm seeking damages for defamation and negligence stemming from a widely distributed report entitled "Who Is Next?" following the collapse of IndyMac Bancorp Inc.
BankAtlantic shares lost a third of their value on July 14 after Mr. Bove included the Florida bank in his report, but bounced back after the company put out a press release saying it remains well-capitalized. A number of banks’ stocks were pummelled that day as well.
BankAtlantic’s stock was recently off 8% at $1.55; the shares have fallen steadily since the beginning of 2007 when they traded around $14.
In a statement Monday, BankAtlantic said, "The problem is that, while Bove’s report purports to consider which banks might fail, he failed to examine the health of the banks and thrifts in his report. Instead, he only examined holding company data which, in at least our case, is meaningless information. This is simply shocking."
In asserting its viability, BankAtlantic said its ratio of non-performing loans to total loans is 1.25%, while its ratio of non-performing loans to capital and reserves is 12.5%, both well above well-capitalized standards.
Shame on the corporate attorneys involved in this absurd waste of time . . .
UPDATE July 21, 2008 8:14pm
Here’s Bove discussing the litigation: "I wouldn’t do anything different"
BankAtlantic Sues Analyst Bove
By LAUREN POLLOCK
July 21, 2008 3:30 p.m.
BankAtlantic Sues Analyst Richard Bove for Defamation
Bloomberg, July 21 2008