Whitney’s unorthodox personal life may well be connected to her lack of concern about being a professional outlier. Analysts often get quite cozy with the companies they cover, and those that don’t sometimes pay a steep price (Michael Mayo was fired by Credit Suisse in 2000 because, it was speculated at the time, he had put negative ratings on the entire banking sector). “We dealt with so many sleazy managements I never relied on management for the truth,” Whitney says. “I relied on the numbers.” Her honesty has earned her an enthusiastic following among hedge funds. “When I read one of her reports, I pay attention, whereas I ignore other analysts because I think they’re shills for management,” says the hedge-fund manager Whitney Tilson.
After she issued her infamous report on Citi on Halloween 2007 (the title, “Is Citigroup’s Dividend Safe? Downgrading Stock Due to Capital Concerns,” now sounds tame), she was shocked by the intensity of the reaction. “I knew it would be a big deal, but I didn’t know it would be a market-crashing event,” she says. “It provoked fury amongst people. Rage, fury, and the dismissal of it, like, ‘Oh, what does she know, you know, who is she?’ I was just like, Whatever. If anyone ever told me that my math was wrong? That would have gotten me. That’s worse than telling me that I’m fat.”
Whitney received abusive phone calls and at least one death threat. Layﬁeld canceled a trip to Texas because he was afraid of leaving his wife alone: “I was a basket case,” Whitney says.
To cope, Whitney started working out with a celebrity trainer named Jay Cardiello, whom she’d met at Bikini Boot Camp, a ﬁtness retreat she attends every year with her girlfriends in Mexico. Cardiello put Whitney on a regimen that lasted for months: They met at the gym twice a day, once at 5 a.m. and again at eight or nine at night, for an hour and a half each time. “I made the right call!” she assured herself before jabbing into Cardiello’s boxing mitts. “I was right! I was right! I was right!”
Though the banking sector is melting down just as Whitney predicted it would, the ﬁnancial world remains crowded with Whitney critics. Institutional Investor published its annual analyst rankings for 2008 in October, and Whitney failed to place among the top three large-bank analysts, listed only as a runner-up, practically a snub. When I put in a call to a respected manager of a ﬁnancial-services investment fund to talk about Whitney, an assistant groans when she hears why I’m calling. “Hah! One of his favorite stories,” the assistant snorts, referring to her boss. “He calls her … I won’t tell you what he calls her. Let me just say this: She is always negative. I just wonder whose interest it serves. I’d love to see the day when she’s positive.”
It’s an implied critique that’s echoed elsewhere, the idea that Whitney or others like her are somehow aligned with the “shorts,” usually hedge funds, betting that stocks go down. “That’s ridiculous. I’ve saved long-only funds a lot of money,” Whitney says in response. “It’s so offensive to suggest I’m someone’s puppet. I don’t identify myself with a bear-market call. I don’t need a bear market to stay in business.”
Thus far, that’s how Whitney has made her mark on history. According to a just-published book about the collapse of Bear Stearns called House of Cards, by William Cohan, Whitney became convinced that Bear was insolvent during the week leading up to the company’s emergency sale to JPMorgan, in March 2008. She’d been cowed by the reaction to her Citigroup report, however, and decided not to publish a piece about Bear. “It was a conscious choice not to write anything,” she told Cohan. “Because I thought it was such a tenuous situation that I was going to get in serious trouble.”
The next big moment in Whitney’s career—the one that will seal her reputation, or possibly spoil it—is when she changes her mind about the future of the banks and says so publicly. When I suggest this to Whitney, that Wall Street is waiting for her to call the rebound in ﬁnancials, she gets prickly. “You hear that over and over again, as a way to disparage calls,” she says. “I have not missed a bottom yet. It’s just not the bottom. You know,” she adds, angrily, “I might do better when the market turns. When things go up, it’s a lot easier living.”