The word on TheStreet.com

Originally posted on 12/18/2008 by Judd Bagley

One of the central theses of The Story of Deep Capture, Mark Mitchell’s epic work of media criticism, is that the staff of TheStreet.com is overwhelmingly beholden to the interests of a few criminal, short-selling hedge funds.

Herb Greenberg, Dan Calorusso, Dave Kansas, Jesse Eisenger: all launched their careers at TheStreet.com.

Such an ignominious list of alumni is matched only by the institution’s co-founder: Jim Cramer, and early investor: David Rocker (founder of Rocker Partners hedge fund).

There’s little doubt that TheStreet.com has been home to more than its fair share of captured journalists. What’s less clear is the matter of cause and effect: does the organization excel at breeding, or merely attracting such people?

Based on the example of former TheStreet.com writer Peter Eavis — contrasting what can be learned about him in the many documents recently made public in the lawsuit pitting Fairfax Financial against SAC Capital and several other hedge funds, with what he’s accomplished since — I’m inclined to believe that the dysfunction at TheStreet.com is a product of the toxic culture of the place, and that well-intended writers with talent who leave early enough have the capacity to redeem themselves.

Peter Eavis features prominently in several documents acquired through discovery in the Fairfax case. The earliest mention of him appears in an email dated July 10, 2002, in which John Hempton told Rocker employee Monty Montgomery “I have Peter interested” in his belief that Fairfax Financial was a fraud.

Later, short selling hedge fund manager Jim Chanos refers to Eavis as John Hempton’s “guy”.

On January 15, 2003, Eavis published his first column on Fairfax: Unsure times for insurer Fairfax Financial, making a special effort to attack the integrity and business acumen of Fairfax CEO Prem Watsa.

While the tone of that piece implies plenty about Eavis’s state of mind when he wrote it, somewhat more telling is the comment he uses to preface the article when sending it, just 20 minutes after publication, to Rocker hedge fund employees:

“Watsa good old Canadian insurer to do?”

One month later, Eavis publishes Fairfax Tirade Can’t Obscure Sea of Red, comparing Prem Watsa to, among other things, a wounded animal.

Less than 20 minutes later, Eavis sends the column to Rocker, prefaced by:

Prem gets nasty.

Exactly one month later, it was Eavis again, with Fairfax’s Buffett Pose Falls Short, which he again promptly sent, this time commenting:

Imitation gives way to evisceration.

On April 3, 2003, Eavis is back on the attack, with Fairfax Walks the High Wire on Rates, which he also wastes no time in noting:

Prem in the bunker.

One month and two days later, Eavis writes Fairfax Fog Only Thickens, calling the company “beleaguered” despite its having just announced first quarter earnings of $10.60 per share. Eavis claims he offered Fairfax an opportunity to respond, but that the company “didn’t immediately return a call seeking comment.”

The lack of a prompt return call might have been a result of the fact that Eavis filed his column at 7:10am EDT.

While Fairfax employees likely were not in the office at that early hour, we know Eavis was, as he emailed the column within six minutes, prefaced by:

More on the anti-Buffett.

Finally, on May 15, 2003, we see the most telling email exchange of all, this time following Eavis’s column Fairfax Is Banking on the Luck of the Irish.

In stark contrast with the victorious tone of the emails on his four earlier columns, Eavis is sheepish when announcing this latest, saying:

Two numerical errors in the first version, so I’m re-sending this. The mistakes made Fairfax look better than it should. A link to the corrections can be found at the bottom of the piece. Apologies.

Apologies?

Apologies!

Hey, Peter…even the best reporters make mistakes. That’s why pencils have erasers, as they say, and why publications have “Corrections and Clarifications” sections. If you owe anybody an apology, it’s your readers, which was taken care of in the body of the correction itself.

And yet, Eavis apparently felt apologies were also due Rocker Partners hedge fund, where an anticipated payday depended upon Fairfax looking as bad as possible.

Why on earth would Eavis feel such a debt to Rocker?

A little less than an hour later, Monty Montgomery replied, writing:

…….boy, hard to believe, but i think it’s very true…..this ends up with Hempton summoned to toronto to tell the authorities/regulators how he figured it out when no one else could……toronto’s just across the lake from the farm, that will be a good excuse for us all to get together there and throw back a couple of cold beers…….

To which Eavis responded:

sounds very tempting — both the farm and the ringside seat for watsa’s comeuppance.

I’d be hard pressed to list all the standards of ethical journalism Peter Eavis violated in just his first five months of covering Fairfax Financial.

But if I were to try, I’d start by pointing out the deep conflict of interest inherent to obviously using his column as a tool to make David Rocker, one of his employer’s largest investors, rich.

Interestingly, in the months to follow, Eavis seemed to lose interest in Fairfax, his frequency of coverage plummeting from over one column a month to less than one per quarter. About that time, he also seems to have quit seeking the approval of anybody at Rocker Partners.

Then, in 2006, Eavis left TheStreet.com for the Wall Street Journal, where he has evolved into a quite prolific and skilled contributor, whose broad body of work appears not to include anything relating to Fairfax.

Is Peter Eavis corrupt? I’d have to say that no, I don’t think so. At least not corrupt after the tradition of Bethany McLean.

Instead, I suspect the culture at TheStreet.com to be very corrupting, though the condition does not have to be a terminal one.

Finally, I wish to point out that in seeking his comment, I did establish contact with Peter Eavis, and at his request provided copies of the above-referenced emails. I was disappointed when he failed to offer a response two days ago, as promised. Should Peter change his mind at any time, I will gladly append his comments below.