Most Hated Man on Wall Street, The

HE'S BEEN CALLED A "GLOOM AND doomer," a "Cassandra among optimists," and a "rogue short seller" who makes money on the misery of others. Investment advisers and stockbrokers regard him with fear and loathing. The disgraced CEO of Tyco International considers him an archenemy.

For the last five years, Dallas fund manager David Tice hasn't made many friends. He's been preaching the collapse of the stock market, calling Alan Greenspan a "one-trick pony" who will go down as the worst Federal Reserve chairman in history, and generally going against the grain. But as the CEOs of high-flying Enron, Tyco, ImClone, and WorldCom have crashed and burned, Tice's reputation as a number-crunching Jeremiah has soared.

Tice, a TCU grad who turns 48 this month, says he doesn't like the word "vindication." "We partied too hard with cocaine and tequila, and now we're paying for those excesses," Tice says. "I just warned people."

Those warnings have recently paid off. Tice's Prudent Bear Fund, which "shorts" stocks (profiting when those stocks fall), has $354 million in assets and has posted 30 percent-plus gains in the past year. His research firm, David W. Tice & Associates, which he started in 1988, now employs 11 full-time analysts. And about 200 institutional investors, managing nearly $2 trillion in assets, purchase his publication, Behind the Numbers. Even Congress has taken notice of Tice, recently calling him to testify about corporate accounting practices.

But back in 1999, his warnings were getting a different reception. As the Prudent Bear was posting hefty losses of 20 to 30 percent, Tice was the first to point a finger at Tyco. He was blamed when the stock lost $30 billion and the SEC opened an investigation. (The SEC dropped the matter in 2000 without taking action. An unrelated criminal investigation in June of this year forced CEO Dennis Kozlowski to resign.)

Tice scoffs at the idea he holds the power to drive any stock's price. "I'm fly in the ointment," he says. "I'm not causing any of this. It's about excesses and imbalances."

There are those who still don't see things Tice's way. His recent prediction that the Dow could fall to 3,000 and the NASDAQ to 500 angered some investment advisers.

"People like David Tice feed on fear, skepticism, and doubt," says Douglas Gill, president of SummitAlliance Investment Group. "We've been focused on those who issue rosy reports when they know things aren't that great to protect profits. Let's also look at the David Tices, who try to create negative interest in a stock." He says Tice never produced evidence of wrongdoing at Tyco, but his report cost stockholders millions-and Tice profited by shorting Tyco.

Michael Cox, chief economist of the Federal Reserve Bank of Dallas, compares Tice to a broken clock-right twice a day. "You can always find a pessimist,"

Cox says. "But all the fundamentals are in place to make the market strong."

In fact, from he time this article was turned in until the time D went to press one week later, the Dow surged more than 1,000 points. According to Tice's logic, though, the higher the market goes, the more right he'll be. "If we're wrong," Tice told D in 1999, "or if we are way too early and the mania just keeps getting bigger, God help us all, because it is just going to be that much worse when it ends."

The sudden point gains don't faze him. Tice believes the coming year will provide plenty more "bounces," as the Dow heads even lower. As for when the average investor should get back in, Tice answers, "When 70 to 80 percent of stockbrokers are out of jobs." it's that kind of talk that keeps making enemies for David Tice. "People don't invite me out to dinner, it seems," he says. "There's this attitude of paralysis. 'You can't be right, because if you're right, I lose all my money."'

Copyright D Magazine Sep 01, 2002
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