No. of Recommendations: 5

I found the snippets of article you provided to be long on insinuation and short on facts.

You could say the same thing about the articles that Tilson wrote on these companies. Here are his comments with regards to Allied Capital. It sounds pretty long on insinuation and short on facts to me.

The primary difference between the two is that Tilson is providing commentary that is his opinion, whereas the Wall Street Journal is supposed to be reporting facts. Unless this article appeared on the OpEd page, which I don't believe it did, then the reporter was using pretty slimy techniques to make his point.

I normally have high regard for the WSJ and I'm often in agreement with its editorial page. But when the two start to blur lines, then I think there is a problem. Perhaps the writer was trying to make his article more interesting, but that doesn't change the fact that his biggest hints at collusion were that the hedge fund managers went to the same school, they appeared at a forum on how to start a hedge fund (hmmm, pretty strange for hedge fund managers, huh?), they wrote publicly published opinions that said the stock they were covering was not all it cracked up to be, and they were "hostile" to the CEO during a conference call. I'm sure Farmer Mac appreciated the PR piece the WSJ put out.

"What purpose does an article like this serve investors, given that he has offered absolutely NO information or analysis on the company??"

No analysis? Tilson recommended readers go directly to the source of the allegations against the company and read for themselves and make their own opinion, and he provided the links to it no less. Moreover, here's a paragraph from his article about the reserves policy of AGM which appeared to be a central complaint Tilson had about the company:

"How can a financial company do this? Easy. Simply write a lot of new business, reduce the reserves and -- presto! -- huge reported profits. I believe this is exactly what Farmer Mac did to produce what appeared to be a blowout quarter, in which the company trumpeted in the headline of its press release: "Farmer Mac Achieves Record Earnings; Operating Earnings Per Share Up 50%.""

He then goes and provides a quarter-by-quarter chart from 1997 to 2002 on how the company has apparently been lowering its reserves. Maybe you don't agree with his analysis or you think he is focusing on the wrong issue, but you can't say he didn't provide analysis.

Last, he makes a case for the average investor to be careful with where he parks his funds, which to me sounds like the highest level of prudence.

"The larger lesson for investors here is how easy it is for financial companies to manipulate earnings, so only invest in such companies when you have total confidence that management has the highest degree of competence, integrity, and conservatism."

From what I have seen, there isn't any smoke, let alone fire.

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