Whole Foods Performance on Track, Despite SEC Probe of CEO's Actions

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Whole Foods Performance on Track, Despite SEC Probe of CEO's Actions

AUSTIN, Texas -- Despite the news that the U.S. Securities and Exchange Commission is investigating questionable online postings made by Whole Foods Market, Inc.'s chief executive, the value of the retailer's shares haven't changed significantly and are unlikely to do so in the near future, a JPMorgan analyst said yesterday.

Shares of Whole Foods on NASDAQ dropped 1.63 percent yesterday, closing at $39.84, which is still in the retailer's 52-week range.

The Wall Street Journal had reported late Friday that the SEC is investigating comments made by Whole Foods' c.e.o. John Mackey on Internet financial forums. The postings, which he made under the name "rahodeb" (a play on the name of Mackey's wife, Deborah), included comments accusing rival Wild Oats Markets, Inc.'s stock of being overpriced, and predicting Wild Oats would fall into bankruptcy and be sold.

The informal probe comes after the Federal Trade Commission filed a lawsuit was against Whole Foods by, in an effort to block Whole Foods from buying Wild Oats for around $565 million because of antitrust concerns.

JPMorgan's Stephen C. Chick said in his report that while Mackey's actions "lack judgment," they are unlikely to affect Whole Foods' stock price adversely.

The analyst said he doubted Mackey's posting made much of a difference to Wild Oats, either. "It doesn't seem likely that investors who may have read these chat rooms would have had reason to act, thereby materially affecting the stock price, because the CEO's identity seemed to be concealed and the materiality of the comments made looks low," Chick wrote in a client note.