Prudential Financial’s Yardeni Joins Oak Associates as Chief Strategist

Prudential Financial Inc.’s Edward Yardeni, one of the most bullish strategists on Wall Street, left the firm to join Oak Associates Ltd., a money manager that oversees more than $8 billion.Mr. Yardeni, 54, will be chief investment strategist at Oak, an Akron, Ohio, firm that manages mutual fund, pension, and endowment assets. He held the same title at the brokerage unit of Prudential, where he had worked since 2002. Prudential’s Edward Keon, 51, will replace Mr. Yardeni, said spokesman Jim Gorman, and remain the firm’s chief U.S. equity strategist and director of quantitative research.“At some point, Wall Street strategists want to see if they are as good as they think they are,” Mr. Yardeni said in a telephone interview. “The only way you can do this is to go to a buy side firm and establish a track record.”Mr. Yardeni is leaving Prudential as it scales back operations in a series of cost-cutting moves. The firm exited investment banking in December 2000 and sold its money-losing retail brokerage business to Wachovia Corp. in July 2003 to focus on institutional equities.In July, Prudential fired 27 people in the institutional equity research, trading, and sales group.Greg Smith, Prudential’s investment strategist before Mr. Yardeni, left the firm in 2001 to manage money.Mr. Yardeni said in July that he had been too optimistic, and lowered his forecasts for stock market returns. He reiterated that the American market looked inexpensive relative to earnings because investors had become too worried about rising interest rates. He said the Standard & Poor’s 500 Index may end next year at 1,300, which would be a 16% gain from today’s level, down from a previous forecast of 1,450.He raised his stock allocation to 70% from 65% in January 2003, citing expectations for rising corporate profits. The S&P 500 climbed 20% through the end of the year.Mr. Yardeni said in an interview he expects the S&P 500 to rally and finish the year at 1,190. “The economy is growing, inflation is extremely low, interest rates remain tame, and earnings growth is fantastic,” he said. “The underlying fundamentals are very bullish.”He was ranked throughout the 1990s among the top three economists on Wall Street in Institutional Investor magazine’s poll of money managers. One forecast he got wrong: He predicted in the late 1990s that computer malfunctions caused by the year 2000 date change would cause a global recession.Previously, Mr. Yardeni worked at Deutsche Bank AG’s securities unit as its chief investment strategist. He was also an economist at C.J. Lawrence and E.F. Hutton.Jim Oelschlager, founder and chief executive of Oak Associates, said he asked Mr. Yardeni to join Oak in the new position about six weeks ago. Mr. Oelschlager said he’s known Mr. Yardeni for over 20 years and respects his work.“If Ed had turned us down, I had no other plans to hire an investment strategist,” said Mr. Oelschlager, 61, in a telephone interview. “It was going to be Ed or nobody.”The firm’s $1.7 billion White Oak Growth Stock Fund, run by Mr. Oelschlager, usually holds 25 or fewer stocks. The fund, which owned 20 securities as of June, has lost an average of 9.7% annually the past five years. The S &P 500 dropped 2.4% annually in the same period.Oak Associates studies the global economy to try to determine which industries will perform the best. The firm then picks individual stocks that it thinks will have the best earnings growth, and aims to hold them for several years.

Prudential Financial’s Yardeni Joins Oak Associates as Chief Strategist

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