Meredith Whitney

Meredith Whitney

Whitney in New York, 2007
Born (1969-11-20) November 20, 1969
Summit, New Jersey
Nationality American
Alma mater Brown University
Occupation Financial analyst
Employer Arch Capital Group
Spouse(s) John Layfield (m. 2005)

Meredith Ann Whitney (born November 20, 1969)[1] is an American financial analyst. She is best known for successfully forecasting the difficulties of Citigroup and other major banks during the financial crisis of 2007–08,[2] and then for predicting in 2010 the still-unrealized default of US municipal bonds totaling hundreds of billions of dollars.[3]

Education and career

Whitney grew up in Bethesda, Maryland.[4] She graduated from The Madeira School in 1987 before attending a post-graduate year at The Lawrenceville School, becoming a member of its first co-ed graduating class. She graduated with honors from Brown University[5] in 1992 with a B.A. in History.[1]

Whitney joined Oppenheimer Holdings in 1993 as a Director, and in 1995 she joined the company's Specialty Finance Group. In 1998, she left Oppenheimer to become an Executive Director at Wachovia. Whitney returned to Oppenheimer in 2004, where she researched banks and brokers as a Managing Director. She resigned from Oppenheimer on February 19, 2009 to establish her own firm, Meredith Whitney Advisory Group (MWAG), where she produced company-specific equity research on financial institutions and analyzed the sector's operating environment.[6]

In 2013, Whitney de-registered MWAG[7][8] and started her own hedge fund, Kenbelle Capital LP, which soon encountered significant difficulties. Kenbelle's investments performed poorly, senior staff members resigned, and majority investor BlueCrest Capital Management sued for the return of its $46 million investment.[9] In May 2015, Whitney resolved the lawsuit, shut the fund, and did not plan to return to professional money management.[10]

In December 2015, she joined Bermudan insurer Arch Capital Group as a manager overseeing outside investment firms.[11]

Professional recognition

Whitney issued a particularly pessimistic, but accurate, research report on Citigroup on October 31, 2007, to which many Wall Street analysts, and the news media, paid attention. She noted that the bank's dividends paid out to investors were greater than its profits at the time, and made the case that this would lead to bankruptcy.[12] Shortly after the report's publication and a subsequent drop in Citigroup's stock, Charles Prince resigned as the bank's CEO.[13][14] Earlier that year, Forbes magazine had listed Whitney as the second-best stock picker in the capital-market industry.[15]

Whitney's extremely bearish view on banks landed her on the cover of the August 18, 2008, issue of Fortune magazine. Even before the problems that befell Merrill Lynch and Lehman Brothers in September, she said, "It feels like I'm at the epicenter of the biggest financial crisis in history."[2] That year, Fortune listed her among the “50 Most Powerful Women in Business”,[16] The New York Post listed her among the 50 most powerful women in New York City,[17] and a CNBC viewer survey named her as "Power Player of the Year" over Jamie Dimon, Ben Bernanke, and Hank Paulson.[18]

On December 19, 2010, in an interview on the CBS program 60 Minutes, Whitney stated that 50 to 100 counties, cities, and towns in the United States would have "significant" municipal bond defaults, totaling "hundreds of billions" of dollars in losses, and that "it'll be something to worry about within the next 12 months."[3] Since the record amount of money lost in one year through municipal bond defaults was just over $8 billion, Whitney's comments about hundreds of billions in losses drew a great deal of attention, much of it critical.[19] She later described her forecast as a "guesstimate" involving "fifth-derivative dimensions".[7] As of July 2013, her prediction had not materialized,[20] save for that month's bankruptcy of Detroit ($7 billion loss).

According to Michael Lewis in Vanity Fair: "Many of the articles attacking her accused her of making a very specific forecast — as many as a hundred defaults within a year! — that failed to materialize... But that's not at all what she had said: her words were being misrepresented so that her message might be more easily attacked. 'She was referring to the complacency of the ratings agencies and investment advisers who say there is nothing to worry about,' said a person at 60 Minutes who reviewed the transcripts of the interview for me, to make sure I had heard what I thought I had heard. She says there is something to worry about, and it will be apparent to everyone in the next 12 months.”[21]

"A tale of two Americas is emerging: one weighed down by debt and facing de minimis economic growth and another brimming with opportunity and nimble to invest in the future." This was the thesis to Whitney's 2013 book, Fate of the States: The New Geography of American Prosperity.[22][23] She argued that a "new map of prosperity" was emerging in the wake of the financial bust, with jobs moving away from the coasts and toward 17 "central corridor" states in the Midwest and Mountain West.[24]

Personal life

Whitney married retired WWE professional wrestler and fellow Fox News Channel contributor John Layfield on February 12, 2005, in Key West, Florida.[5]

References

  1. 1 2 McDonald, Duff (September 29, 2011). "The Prophet Motive". The Wall Street Journal. Retrieved January 13, 2015.
  2. 1 2 Birger, Jon (August 4, 2008). "The Woman Who Called Wall Street's Meltdown". Fortune. Retrieved May 12, 2010.
  3. 1 2 Kroft, Steve (December 19, 2010). "State Budgets: Day of Reckoning". 60 Minutes. 13 minutes in. CBS. Retrieved February 22, 2015.
  4. ↑ Birger, Jon (May–June 2009). "The Prophet of Dollars & Sense". Brown Alumni Magazine. Retrieved November 26, 2016.
  5. 1 2 Staff (February 13, 2005). "Weddings/Celebrations; Meredith Whitney, John Layfield". The New York Times. Retrieved February 13, 2005.
  6. ↑ Stempel, Jonathan; Grenon, Andre (February 19, 2009). "Prominent Oppenheimer bank analyst Whitney resigns". Reuters. Retrieved February 22, 2015.
  7. 1 2 Abelson, Max; Moore, Michael J. (October 10, 2013). "Meredith Whitney Winds Down Brokerage After Setting Up Fund". Bloomberg News. Retrieved January 13, 2015.
  8. ↑ "Company Overview of Meredith Whitney Advisory Group LLC". Bloomberg BusinessWeek. Retrieved January 13, 2015.
  9. ↑ Abelson, Max (January 12, 2015). "How Meredith Whitney's American Revival Sputtered in Debut Year". Bloomberg News. Retrieved January 13, 2015.
  10. ↑ Copeland, Rob; Zuckerman, Gregory (June 10, 2015). "Meredith Whitney Shuts Her Hedge Fund". The Wall Street Journal. Retrieved October 15, 2015.
  11. ↑ Abelson, Max; Basak, Sonali (December 8, 2015). "Meredith Whitney Is Back: Overseeing Stocks at Bermuda's Arch". Bloomberg News. Retrieved December 9, 2015.
  12. ↑ Whitney, Meredith; Krawiec, Carla (October 31, 2007). "Is Citigroup's Dividend Safe? Downgrading Stock Due to Capital Concerns" (PDF). Equity Research. CIBC World Markets. Retrieved November 15, 2015.
  13. ↑ Lewis, Michael (April 9, 2008). "The Rise and Rise of Analyst Meredith Whitney". Bloomberg News. Retrieved February 22, 2015.
  14. ↑ Goldstein, Philip (November 2, 2007). "Meredith Whitney: The $360bn analyst". The Times. London. Retrieved May 12, 2010.
  15. ↑ Staff (May 1, 2007). "The Best Analysts: Stock Pickers". Forbes. Retrieved February 22, 2015.
  16. ↑ Staff (October 13, 2008). "50 Most Powerful Women: 35. Meredith Whitney". Fortune. Retrieved November 15, 2015.
  17. ↑ Mirchandani, Raakhee (June 1, 2008). "The 50 Most Powerful Women in NYC". The New York Post. Retrieved February 22, 2015.
  18. ↑ Kolhatkar, Sheelah (March 22, 2009). "In Meredith Whitney We Trust?". New York Magazine. Retrieved November 15, 2015.
  19. ↑ Mysak, Joe (December 22, 2010). "Meredith Whitney Overreaches With Muni Meltdown Call". Bloomberg News. Retrieved February 22, 2015.
  20. ↑ Ro, Sam (July 8, 2013). "Meredith Whitney Advisory Group Struggling". Business Insider. Retrieved January 13, 2015.
  21. ↑ Lewis, Michael (November 2011). "California and Bust". Vanity Fair. Retrieved January 13, 2015.
  22. ↑ Whitney, Meredith (2013). Fate of the States: The New Geography of American Prosperity. Penguin. ISBN 9781591845706.
  23. ↑ Task, Aaron (June 5, 2013). "Meredith Whitney's 7 Best States for Business and Economic Growth". Yahoo Finance. Retrieved January 13, 2015.
  24. ↑ Mullaney, Tim (June 5, 2013). "Meredith Whitney redraws 'map of prosperity'". USA Today. Retrieved January 13, 2015.
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