Monday, December 20, 2010

Conference-Gate Revisited

Well, what goes around comes around.

Barron’s is recommending Sallie Mae, the fallen-angel student loan servicer (the Feds have taken over the task of actually lending the dough) which had a near-death experience during the financial crisis and is now being resurrected as a value stock.

As the article notes, Sallie Mae’s “formal name” has been replaced, like Prince’s once upon a time, by a symbol. In this case, the symbol is “SLM,” the company’s stock ticker symbol.

The obvious reason for the name thing is that “SLM” has no desire to be associated with the “Sallie Mae” that provided one of the most entertaining conference calls in the history of conference calls, as the Financial Bubble of Our Time was just beginning its Great Unwind.

Now, we have no opinion to the positive or negative on the stock itself these days, but we couldn’t help think back to those dark days, and thought it be worth a stroll down memory lane through the archives of NotMakingThisUp:


Thursday, December 20, 2007
Expletives Deleted! Tapes Erased! It’s Conference-Gate!


“How (inaudible) is this? Steve, let’s go. There’s no questions, let’s get the (expletive) out of here.”
—Al Lord, CEO Sallie Mae Corporation


Call Woodward and Bernstein—it’s Conference-Gate!

That’s right: the official replay of Wall Street’s most famous conference call has been tampered with!

I am not making that up.

In a cover-op worthy of Nixon and his Watergate-era tape-erasing scandal, the best part of yesterday’s Sallie Mae conference call—CEO Al Lord’s above-quoted “let’s get the (expletive) out of here” which even the Wall Street Journal highlighted in this morning’s article on Lord’s melt-down—has been deleted.

That is a shame, because yesterday’s call ranks right up there in the upper pantheon of our Patrick Awards, whereby NotMakingThisUp semi-regularly awards Wall Street’s Finest and Corporate Bigs alike for whatever strikes us as particularly outré commentary, in a realm where outré commentary is generally the norm.

In fact, the Sallie Mae call will probably go down as one of the Top Ten Train Wrecks of All Time.

Get a load of this:

Bill Cavalier—Société Genéralé

Can you talk a little bit about the pass-through market? Clearly, there is pretty much no appetite for student loan paper at this point. What are you being told about when you think there will be a market for your pass-through notes so that we can start to do some….

Al Lord—CEO
I’m not sure what you’re talking about. I’ve been talking to whom?

Bill Cavalier—Société Genéralé
When you do a securitization, right, you have a bank that arranges -- that actually does the arranging, right, you have an arranging bank. Somebody must be telling you something about what the market is looking like, what their expectations are for next year…. We're trying to put together projections here, Al. We're trying to figure out what your stock is going to be worth, and you have got to give us some guidance, you've got to give us some numbers. I don't even see a margin number here for the stuff that you've done. Can you give us some handle on what your stock is worth?

Al Lord—CEO
You should give Steve [McGarry, IR guy] a call.

Bill Cavalier— Société Genéralé
But you’re the CEO. You’re the guy who just took over the company.

Al Lord—CEO
Yes, that’s exactly right, I’m the CEO. You should give Steve a call. Next.


Nothing on paper, virtual or hard copy, can replicate the angst, anger and frustration projected in those words as spoken by Mr. Lord and the investors and analysts asking questions: it must be heard to be believed.

Unfortunately, the Big Moment—Mr. Lord’s final blowing-off of the accumulated pressure as head of a company caught up in both the highly public collapse of a private equity transaction of its making and a credit crisis not of its making—no longer exists.

That’s right.

Mr. Lord’s “How (inaudible) is this? Steve, let’s go. There’s no questions, let’s get the (expletive) out of here” has been erased from the conference call replay.

Both Haldemen and Erlichman would be proud.


Jeff Matthews
I Am Not Making This Up


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The content contained in this blog represents only the opinions of Mr. Matthews.
Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business by Mr. Matthews: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

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