Lenny Dykstra Is Bankrupt (I called it!)

Poor men wanna be rich, rich men wanna be kings,
And a king aint satisfied till he rules everything.

    -Bruce Springsteen

Traffic to this blog’s posts on Lenny Dykstra skyrocketed today after the baseball legend declared bankruptcy -- something I predicted in April after he was dumped by TheStreet.com (TSCM):

Lenny’s “Nails on the Numbers” newsletter has been renamed “Deep-in-the-Money Calls” and is now written by options-market star and all-around nice guy Jon Najarian. I can’t say I’m surprised at this turn of events. While Lenny was a major profit-generator for TheStreet.com, the bad press was starting to make Lenny more trouble than he’s worth.

And if they had to replace a former baseball player, who better than a former football player, especially one that actually knows options?

This story may get spun as Lenny taking personal time to handle his divorce, but time has been running out for him. I have no doubt that TheStreet.com would have eventually pulled the plug on Lenny because they can’t have a financial wreck pitching investment advice to the masses.

Lenny’s going bankrupt. How do I know?

It’s simple. I’ve never met a rich person that tried so hard to look rich.

While I’m clearly not a fan of Dykstra, this is a tragic story. He accomplished quite a bit in baseball and business before he decided to play Wall Street bigshot. It’s a classic story of an ego getting completely out of control, only to face the inevitable, ugly crash back down to Earth. You can only burn so many people before the fire gets you too.

Unfortunately for Lenny, this story is going to get uglier. A little birdie told me something pretty shocking about Lenny’s spending that hasn’t been picked up by a single media outlet. It’s not something illegal, but I would consider this act highly unethical if true.

If I can confirm it, I’ll publish it.

P.S. Read my story about Ron Insana’s early adventures in the investment newsletter world!

Inside Ron Insana’s Time Machine

I received a great deal of positive feedback from my coverage of baseball legend and options-trading “expert” Lenny Dykstra’s stint as a newsletter author for TheStreet.com (TSCM). I hate crapping on the products of a company I once loved working for, but take a look at what they’re feeding me and you’ll see why I’m a little fired up tonight.

First, some background: In what appears to be an effort to beef up it’s subscription offerings, TheStreet.com has brought in some heavy hitters like former Morgan Stanley (MS) Strategist Rick Bensignor, and the subject of this piece, former CNBC Senior Analyst Ron Insana.

I’ve always viewed Ron as a pretty thoughtful and even-handed guy, so I was pretty baffled at what I found in his Market Movers newsletter. Let’s dig in!

Here are two key excerpts from the disclaimer section of the inaugural issue of the newsletter published on Monday, June 29th:

The service consists of, among other things, a portfolio of securities chosen and actively traded by Mr. Insana, initially capitalized on March 13, 2009 with $200,000 of Mr. Isana’s personal funds.

and:

Mr. Insana manages investment portfolios separate from his portfolio in TheStreet.com Market Movers.

Now take a look at Ron’s performance since March 13th, which is a bit better than the S&P 500 over the same time period:

The problem is that Market Movers is taking credit for investments made BEFORE IT EVEN LAUNCHED. Sorry Ron, but that’s just not how investment newsletters work. Your subscribers did not receive the recommendations (since the newsletter didn’t even exist) that drove your alleged performance, so you have no basis for claiming this return.

And since Ron “manages investment portfolios separate from his portfolio in TheStreet.com Market Movers,” how do we know that this portfolio wasn’t cherrypicked to maximize its performance?

I’m emailing this post to Ron, and will publish his response as soon as he gets back to me.

Lenny Dykstra Out At TheStreet.com

UPDATE – Lenny Dykstra Actually Is Bankrupt

Things must truly be getting truly awful for Lenny Dykstra, because it looks like he’s out at TheStreet.com:

Lenny’s “Nails on the Numbers” newsletter has been renamed “Deep-in-the-Money Calls” and is now written by options-market star and all-around nice guy Jon Najarian. I can’t say I’m surprised at this turn of events. While Lenny was a major profit-generator for TheStreet.com, the bad press was starting to make Lenny more trouble than he’s worth.

And if they had to replace a former baseball player, who better than a former football player, especially one that actually knows options?

This story may get spun as Lenny taking personal time to handle his divorce, but time has been running out for him. I have no doubt that TheStreet.com would have eventually pulled the plug on Lenny because they can’t have a financial wreck pitching investment advice to the masses.

Lenny’s going bankrupt. How do I know?

It’s simple. I’ve never met a rich person that tried so hard to look rich.

Lenny Dykstra Was in Bed With AIG

UPDATE: Lenny Dykstra is Out at TheStreet.com

ESPN wrote a pretty in-depth article on Lenny Dykstra’s life in the business world, coming to the conclusion that “either Lenny hates to pay his bills, or he's a financial train wreck.”

The ESPN article was incredibly revelatory, and I’m not talking about the lawsuits or what’s happening with Wayne Gretzky’s old house (which will never sell at a decent price because of the media attention). Nope, I mean Lenny Dykstra’s Ties to AIG.

When you hear AIG (AIG), you may think mismanagement, bailouts, and corporate welfare but that has no relevance here. For the purposes of this article, just think about them like they’re any other insurance company.

Let’s take a look at what ESPN said about Lenny’s connection to AIG:

Dykstra apparently hasn't handled any player investments yet, and it's difficult to determine whether any athletes seriously consider his financial advice, either in the magazine or through his subscription financial service. The early plan was for an athlete to invest at least $250,000 with professional money managers of Dykstra's choosing. Former employees say Dykstra made the rounds in New York trying to line up a financial partner, but the closest he came was with AIG, now a corporate poster child for outrageous greed.

An AIG executive and Dykstra offer conflicting opinions on who backed away from the deal. AIG spokesman Charles Armstrong says it was the company's decision not to go forward. But Dykstra produces a copy of a Dec. 10, 2007, letter from an AIG vice president reaffirming the company's interest in being an "exclusive strategic partner." An accompanying commission schedule proposed to pay The Players Club $90,000 per player recruited to both the AIG universal life insurance and income annuity programs in the first year. There was a caveat, though: Dykstra had to bring in at least 100 athletes.

So Lenny Dykstra would be paid $90,000 for every pro athlete he turned over to AIG?

That’s just not cool.

What are the chances that the only financial services company who was willing to make Lenny a commissioned salesman had the right annuity for everyone? What if Legg Mason (LM) was on board? Or Citigroup (C)? Or Bank of America?

Lenny loves to talk about helping pro athletes hold onto their money but that’s pure BS. He had no interest in finding athletes appropriate financial products – his only goal was to sell AIG products that lined his own pockets. If Lenny gave a damn about his prospective clients’ finances, he would have shopped around for what was right for them, not himself.

More on Lenny Dykstra:

Should We Be Listening to Lenny Dykstra?

Inside Lenny Dykstra’s 99-1 record

Lenny Dykstra Gets Lucky With Intel