Monday, April 23, 2007

Sensient Takes Offense (and Prudential Quickly to the Defense)

By ROB WESTERVELT (Editor, Chemical Week)
Sensient Technologies singled out buy-side equity analyst John McMillin--who covers materials, food, and agribusiness for Prudential Equity—saying in a press release issued this morning that an incorrect statement related to historical calculations of Sensient's stock price was “an attempt to minimize the company’s recent success.”

“McMillin…. incorrectly stated that Sensient’s common stock reached a price of $30 per share in April 1997. In fact, when properly adjusted for splits, the Company’s stock price during April 1997 never exceeded $17.69. Furthermore, at no time prior to April 20, 2007 has the price of Sensient’s stock, when properly adjusted for splits, ever exceeded $27.75 until this past Friday, when the stock reached an intra-day high of $30.34.
Sensient believes Mr. McMillin made the incorrect statement about Sensient’s stock price in an attempt to minimize the Company’s recent success.”

That old saying about never picking a fight with people who buy ink by the barrel comes to mind, but with a slight twist for the digital era. Never pick a fight with someone who can blast out .pdf’s by the dozens in a matter of seconds.

Prudential responded within a couple of hours, acknowledging the error but also taking the opportunity to again re-emphasize a few points.
The Prudential report headline sums it all up: “We apologize for our mistake, but it was not done intentionally—bottom line the stock has done nothing for 9 years and we stated 10 years.”
“In our 20 plus years following food stocks, we have made a mistake or two in our numbers calculations, but never have we seen a company issue a press release on it,” McMillin said in a note to Prudential clients.
"Using Yahoo finance and failing to look at the last number, which adjusts for stock splits, we stated that Sensient (SXT) hit $30 in April 1997, which was wrong. We are sorry for the mistake, but strongly deny the company's claim in a press release that it was done intentionally.
Correct numbers are that SXT is up 67.8% over the last 10 years versus the market's 93.7% gain. We have written on SXT since December 1999 and wish the company had at least called us before issuing its press release. A year earlier on December 31, 1998 the stock hit $27.43. What we remember more than everything is the stock doing nothing since we began studying it, which was about a year before we started writing on the stock. Bottom line, SXT has not really moved in 9 years and while our report on Friday suggested 10 years."

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