Lenny Dykstra & Ron Insana: Two Peas in a Pod?

It’s not the most accurate title in the world, but Lenny Dykstra’s former and Ron Insana’s current newsletters for TheStreet.com (TSCM) have something in common -- taking credit for investment recommendations made before the newsletters even launched.

On his website, Lenny posted a lengthy missive on his controversial Amdocs (DOX) trade, including the following claim:

In June, I finalized the agreement with TheStreet.com and my columns began to post at The Street. However, initially—we were NOT allowed to show any of my pre-street picks in the scorecard; they wanted nothing to do with them.

The scorekeeper again explains:

“I was creating two separate stat books—one for The Street and one for Nails. . . . However, when a few wins—pre-Street wins—started to add up . . . The Street finally allowed us to bring in all Lenny’s pre-Street picks (his wins & those still in play)—including Amdocs—into the stat book, so then I only had to create one.”

And as I posted before, Ron Insana’s newsletter used a similar practice in its launch:

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.

Are TheStreet.com’s newsletter marketing practices getting a little too aggressive?

I believe so, and so does Henry Blodget:

Ever signed up for one of TheStreet.com's investor services?  Then you've probably also received an occasional email like the one below.

It's a personal note from "Jim Cramer."  And it uses the oldest sleazy investment marketing tactic in the book.

What's that?

Cherry-picking.

In an attempt to get you drooling about how much money you'll make if you pony up and buy a subscription, the letter describes a few amazing calls Jim has made in recent months.  Goldman Sachs!  Nike!  GE!  What the letter doesn't do, of course, is describe all of Jim's terrible calls.

This is what many newsletters (and investment managers) do: Tout their good calls and ignore their bad ones.  And they do it because it works.  But for anyone who takes their advice and clients seriously--as Cramer purports to--it's misleading and sleazy.

All I know is, during my time at TheStreet.com, performance measurement and marketing were handled in the most conservative manner – no kind of shenanigans of any kind were ever even suggested, let along implemented.

I’m awfully curious to see TheStreet.com’s second-quarter earnings results, which have been delayed as the company finalizes its numbers. It saw a 12% drop in subscription revenue in the first quarter – could the company’s overly-aggressive marketing practices help it bounce back?

Given the company’s huge cash balance, I’ve been tempted to wade into the stock as a deep-value play. After all, a rising market should directly benefit their subscription and advertising businesses.

But this is all just a bit too much for me...

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