Calling it as he sees it

In an era of stock analysts too afraid, uninformed or greedy to rap the companies they monitor, Jeffrey Saut stands out.

Consider May 8, when better-than-expected quarterly earnings at Cisco Systems Inc. helped boost the Nasdaq stock index nearly 8 percent. Cisco chief executive John Chambers bragged then that the quarter was a "home run." But Saut, chief investment strategist at Raymond James & Associates Inc., cut him off at the knees.

"Mr. Chambers neglected to mention that . . . Cisco beat up on its suppliers and cut costs to make those numbers happen," Saut told the Financial Times. And what about Cisco's handpicked "pro forma" numbers? "I'm 20 pounds lighter pro forma," he told the New York Times.

Saut, 53, came to Raymond James in 1999, when the St. Petersburg brokerage acquired his prior employer, Roney & Co. of Detroit. He splits his time between Michigan and St. Petersburg.

Saut says it didn't take the collapse of Enron Corp. or the dot-com meltdown to convince him to speak his mind. He says he's been writing regularly about the "accounting chicanery that has been going on" for four or five years. And he encourages Raymond's 43 U.S. equity analysts to be just as tough. "We don't call and ask our investment bankers for permission to downgrade a stock," he says.

It's not clear that message has gotten through. In Raymond James' most recent monthly ratings of 455 U.S. securities, none was rated "sell," the lowest in its five-tier system, and only six were rated "underperform," the second lowest. A total of 294 were rated "strong buy" or "buy," the top two tiers. Chief investment officer David A. Kenwood said lower ratings are few in number partly because Raymond James tends to drop coverage of weak stocks.

But Saut seems to set a tone of crusty independence. And if his weekly strategy report of Sept. 10 is any indication, he also may be a bit prophetic. The report, written a day before the terrorist attacks, reflected his puzzlement over the absence of a traditional summertime stock rally. Saut now speculates that friends and associates of Osama bin Laden were quietly ditching their investments in anticipation.

"The point is," he wrote then, "something is out of balance in the cosmos."

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