Erin Callan is Lookin’ Good

Lehman Brothers (LEH-NYSE) earnings release and conference call in March were an important inflection point for their stock and the broader market.

The whisper circuit was trying to do to Lehman what they had done to Bear Stearns, but Lehman CFO Erin Callan, with an assist from the regulators, put out the fire.

As I said at the conclusion of one of the most draining trading days in the history of Wall Street:

March 18th-- A Star is Born
Although she does not look much like the typical Wall Street Warrior, Lehman's CFO, Erin Callan, launched a blitzkreig today that was largely responsible for kicking off the rally and absolutely decimated the shorts that have been dogging the stock. The conference call was well scripted, credible, and hit the mark.....the shorts pressed this stock too hard and were massacred. The Fed has Lehman's back, and it bent but did not break. Yes, it is all a big game, but Erin knows how to play it. 1440 Wall Street

The story behind the scenes that day is coming to light, and it appears that Erin's got game:

Lehman Brothers Holdings Inc. had a lot riding on Erin Callan, its chief financial officer, during an earnings conference call in March. Speculation was swirling that the Wall Street firm might become the next Bear Stearns Cos.

After sifting through the numbers for nearly an hour, Ms. Callan coolly answered more than 20 analyst questions. Then she strode down to Lehman's bond-trading desk and high-fived trading executive Peter Hornick. Later that day, bond traders gave her a standing ovation, a Wall Street rite typically reserved for CEOs. Profit had plunged, yet Lehman shares surged 46%. WSJ

She also seems to attracting a fan club:

Kiroku Masuike for the WSJ

“She is going out on a limb to provide more transparency in Lehman’s earnings, business and strategy,” Ms. Whitney says.

“As long as things play out according to her guidance, she will solidify her reputation among investors.”

Callan groupies probably do not care that she is married, and is as loyal to her beloved dogs as she is to Dick Fuld. If she can narrow the stock’s discount to rival Goldman, the love affair will deepen as traders leg in to Lehman.

Of course the discount can narrow as the stocks fall, and not even Erin’s lipstick can dress up a pig. I don’t know what the hemline indicator is flashing either, but the brokers need to mark some time, as Citi’s estimate reductions on Lehman, Goldman and Morgan Stanley today evidences. The crisis has been averted, but reality bites, and sideways might be the best shareholders can hope for.

Erin had it right on April 11th, when her candid comments threw cold water on some on the optimism her rivals began to exhibit. They were caught swimming naked when the tide went out, but this emperor has clothes. Closets full, in fact.

Tina Sussman, her personal shopper at New York retailer Bergdorf Goodman, has started sending racks of clothes to Ms. Callan’s house because the CFO’s schedule is so hectic. Ms. Sussman describes Ms. Callan’s style as “classic and elegant.”

A slow summer will give Erin time to shop and take a breather. No doubt she deserves it.

And although there is apparently some grumbling over Callan’s recent high profile media appearances; put me in the camp that approves. And I will try to remain impartial, but have to admit I am smitten.

The hemline says Buy, and I am long Erin.

April 11th

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The Hemline Indicator (also known as the “bull markets and bare knees” indicator) looks to the length of women’s dresses and skirts to determine market sentiment. The shorter the skirts—or the higher the hemline—the better the market. Long skirts and dresses bring bearish times. The hemline indicator has been historically accurate since the late 19th century, when long skirts and bearish markets were the norm. Then, during the roaring ‘20s, the stock market soared while women’s knees were bare. Women’s fashion in October 1987 shifted from the once-popular miniskirt to longer ones. And notably, the market then crashed.
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Lehman’s Straight Shooter
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Erin Callan: A Star is Born
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Erin Callan Rains on Wall Street’s Parade
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The content contained in this blog represents the opinions of underthecounter. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

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