WR Hambrecht & Co TiVo Analyst Ryan Hutchinson, Investment Genius

“Analyst Ryan Hutchinson says the first quarter beat his estimates. He says solid performance offered further evidence that the company continues to gain traction in the digital-video recorder marketplace, and remains well positioned to expand into new markets, including advertising, content services, and home-networking services. He’s encouraged by the company’s continued strong operational performance and aggressive new growth strategy.” Business Week, May 26, 2004. TiVo stock price, $7.99 per share.

One of the things that really bugs me about stock analysts is their tendency to advise their clients to do the exact wrong thing at the exact wrong time. On top of the news out today on TiVo’s CEO resigning was the timely subsequent stock downgrade from buy to hold by WR Hambrecht & Co.’s Ryan Hutchinson. Thanks for the timely stock tip Ryan. We’ve only lost half of our money since you were touting the stock in Business Week earlier in May.

Now I’m not one to cry over spilt milk or bad stock tips and personally I’ve never even owned any TiVo stock but had I listened to Mr. Hutchinson I would have been buying the stock all the way down to the bottom today, when I assume that I’d stop buying (and hold) — perhaps until he told me to “sell” when it’s at 2 one might assume. I suppose since most of Mr. Hutchinson’s clients are sitting on the big fat capital gains from the technology market over the past few years that this “tax loss” gain avoidance strategy does make a little sense.

So let me see if I can get this straight. A company is very unprofitable, has significant competitors in a low margin business and last May I’m supposed to buy the stock at $8 — heck last March I was supposed to buy it at $12. And now that the stock is sitting at $4 per share you think that it is the time to chicken out and downgrade the stock to a hold.

Personally I think Mr. Hutchinson owes a follow up response to Business Week on what made the stock look so fantastic at $12 per share that now makes it look so horrible at $4 per share. My own opinion is that if you believed in the story and the stock at $12 in March you should be ecstatic about the opportunity to buy it down here at $4. On the other hand, if it’s going to zero one of the nicest things about a short sale is that if you never close it out it’s tax free profit.

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