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Dear Mr. Berko:

Dear R.P.:

I’m certain that I never “touted” Value Line Investment Services, though I did mention them as an excellent information source. And because I have always had a very negative opinion of its management, I have never recommended the stock nor have I ever recommended any of its mutual funds.

Value Line is one of the screwiest, most absurdly managed and possibly among the most inept, crooked public companies ever to footslog the investment landscape. Value Line Inc. (VALU-$17.59) is 86 percent owned by Arnold Bernhard & Co., a private business that publishes investment newsletters (some of dubious content) and a few obscure magazines and owns 14 mutual funds with $2.6 billion under management.

Jean Bernhard, the 74-year-old ex-CEO called the “Wicked Witch” or “Mean Jean” by most of her 165 employees, nearly spelled VALU into oblivion. The Wicked Witch fostered a totalitarian workplace, fining employees for being two minutes late, eating lunch at their desks or making personal phone calls. Bernhard also billed nine of Value Line’s family of mutual funds for millions of dollars of “phantom” brokerage services, stealing that money from shareholders’ net asset values. The Wicked Witch was fined $43 million by the Securities and Exchange Commission, a pittance according to some who believe the damages were significantly higher. Bernhard, who sneered at the fine, was barred forever from the securities industry.

The charges against Value Line have put significant pressure on its research business, which seems unable to compete with faster-growing rivals like Morningstar, and calls into question the company’s reputation as a provider of objective financial information. During the past six months, VALU’s product circulation has declined 22 percent. It continues to flounder, as have new investors in VALU’s no-load funds.

I also have zero confidence in acting Chairman Howard Brecher. Some on the Street wonder if Brecher, who oozes from the same mud as his predecessor, has the skill sets to guide VALU back to renown. Many observers wonder why he, as the company’s chief legal officer, wasn’t aware of the Wicked Witch’s multimillion-dollar shenanigans.

And though I have spoken very kindly of VALU’s Investment Survey, I have never received any of the company’s services free or at a reduced cost. Nor did I know until late last year that Value Line was using my column in its sales efforts. I wrote Brecher last January and asked him to remove my name from their sales propaganda, then forgot about it until another reader asked about VALU. I wrote him again in early March and late April, and he still has not responded to my request. I suspect his mommy won’t allow him to read my letters or his brain stem isn’t properly connected.

However, my column is part of the public domain, and though I do not want my name associated with VALU, I cannot prevent the company from using that quote from my column. But in all fairness, I still believe that Value Line’s Investment Survey is an excellent source for past financial data.

Nevertheless, I’m concerned that VALU’s stock recommendations may be below par. The company’s sullied reputation makes it difficult to hire potentially competent analysts such as Jeff Vinik (Fidelity guru), David Dreman (Dreman Value Management) and James Margard (Rainier Investment), who got their feet wet at the Value Line desk. The shares now trade by appointment only, and I doubt that VALU will ever return to your $51 purchase price. Sell it, take your loss and get rid of any VALU fund shares you may own.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com