Research Highlights: New Reports, Including Enron
Here's some of the best research we published this past week.
It’s not every week that a former $70 billion company implodes. But implode Enron (ENE) did, and the debacle has hurt other stocks and a host of funds. As Morningstar director of fund analysis Russel Kinnel pointed out in a video report this week, Janus funds, which had been big owners of Enron earlier in the year, did sell Enron before the events of this week. Two funds that evidently weren’t so lucky were Alliance Premier Growth (APGBX) and Merrill Lynch Focus Twenty (MBFOX), both of which dropped sharply the day Enron’s stock collapsed.
Did we foresee how bad things would get for Enron’s stock? No, not even close. (Neither did most Wall Street analysts, although admittedly that's small consolation.) But thankfully we did turn negative on the company well before the collapse this week. As the bad news has gradually come out over the past few months, we cut our fair value estimate of the stock to $10 from $53. As our analyst Rob Plaza said in October: "like an onion, the further we delve into Enron's inner workings, the worse it stinks." Here’s Rob’s latest Enron report--or rather, obituary. For our take on Enron’s creditors, Citigroup and J.P. Morgan Chase, check what our financials analyst had to say in Thursday's Stock Analyst Notes.