Alan Abelson, Former Barron’s Editor And My Mentor, Has Passed

Alan Abelson, former Barron’s Editor and my mentor, passed away last week.

The first time I ever spoke with Alan was February 1970 when I was an MBA student at the Harvard Business School and he answered a collect call from me. Digital Equipment was a Wall Street darling at the time, but I had heard that DEC for the first time was inventorying mini-computers instead of shipping current production.

At that time, Alan’s Up and Down Wall Street column was the most influential on Wall Street. I had called him on a whim because I and several other students had bought out-of-the money DEC puts. He thanked me, and as anyone who has ever talked to Alan over the phone knows, he hung up without saying goodbye. The story ran the following week. DEC stock dropped and our puts were in the money.

I got to meet Alan two months later when he spoke at the Harvard Business School Finance Club. That meeting and a few phone calls eventually led to a summer job as Alan’s assistant.

My first story assignment was a News & Views company story on Woolworth. Alan told me to make an appointment and interview either the CEO or the CFO but never the PR guy, and then write the story. I said okay, did the interview, wrote up the story and handed it in. Years later I learned that Alan was impressed by the fact that I followed his orders and got the story without asking him any questions. What Alan didn’t know was that I was so ignorant about journalism that I didn’t even know what questions to ask.

All of the above is my way of saying Alan took a shot on me and I paid off for him. Alan made many other unusual journalism hires of people who went on to become stars in their own firmaments. Barton Biggs, who preceded me, went from Barron’s staffer to head of Morgan Stanley research and then his own hedge fund. After me Alan hired Jim Grant, of Grants Interest Rate Observer, and Diana Henriques and Floyd Norris of the New York Times, among others.

And then there is the Barron’s Round Table. Several current and former Round Table members have told me they owed Alan a great deal. Not that he made them great money managers, rather Alan’s support took some of them from barely relevant to big time operators. Very few know that Alan over the years had several job offers to leave journalism to become head of research at top Wall Street firms.

About five years ago I asked Alan for permission to write his biography. He declined and that was the last time I spoke with him. What I really wanted to say was that in his time Alan was the real world top cop on Wall Street. And after Alan stepped down as Barron’s editor, no one, repeat no one has picked up his mantle.

Alan stepped down as Barron’s editor in the mid 1990s but continued doing his column until three months before he died. Alan’s Up and Down Wall Street column for many years was the most influential on Wall Street. The late Danny Dorfman even at his peak acknowledged to me that Alan was his better. So, why was Alan’s column so powerful?

First Alan was obviously smart enough to understand and explain in simple terms the most complex financial frauds. Moreover, Alan never quit once he was on the chase of a big time Wall Street con.

One example: Back in 1972 Alan got a tip from the top gold and silver trading house at the time, Mocatta Metals, that an up and coming commodity option shop, Goldstein Samuelson, was a ponzi scheme. I got assigned to check it out and in doing so became friends with both Dr. Henry Jarecki, then Mocatta’s chairman, and Thomas Peterffy, who was among the first to use volatility analysis to trade commodity options. Parenthetically, Thomas went on to use volatility analysis to trade stock options and that led to where Thomas is today–founder and chairman of Interactive Brokers.

With Alan’s backstopping me, I learned everything I needed to know about the pricing of commodity options and why the ultra cheap commodity straddles that Goldstein Samuelson was peddling had to be a Ponzi scheme. My story ultimately exposed the fraud and the fraudsters ended up serving time. For what it is worth, I was told Alan nominated me for a Pulitzer Prize.

Unfortunately, by the early 1990′s Alan was constantly bickering with Dow Jones management who objected to his truth seeking and cared more about short term profits. In 1992, when I was recommending short positions at Market TrimTabs, I recommended shorting Dow Jones. The reason was that Dow Jones had squandered a highly profitable monopoly position as the major purveyor of Wall Street research and news. As everyone knows, Dow Jones today is a minor subsidiary of Fox. I loved that Alan not only posted the TrimTabs Dow Jones short sale recommendation on the bulletin board outside his office but that he kept it there until he left as Barron’s editor in 1994.

With Alan gone, there literally is no one on Wall Street who is willing to take on and expose the fraudsters. Today’s Barron’s applauds itself for the being the first to question Madoff’s credibility. However, I have no doubt that if Alan were in charge of Barron’s at that time, Madoff would have been exposed, saving investors billions.

Below you may find the video.