(FORTUNE Magazine) – The word "ax" doesn't always refer to a sharp-edged implement used to chop down trees. On Wall Street it means the most powerful analyst covering a group of companies in a given industry. Even the most subtle utterance from one of these almighty analysts can send a stock crashing. The best known are equity analysts--Sanford Bernstein's Gary Black (tobacco), Goldman Sachs' Rick Sherlund (software)--but the bond market also has its axes, and none wields a sharper blade than Richard Byrne of Merrill Lynch. Byrne, 36, is ostensibly Merrill's "managing director of global high-yield securities research," but he's really known as the ax of gaming-company junk bonds. That makes him especially fearsome, since much casino debt is high yield. What really sets Byrne apart is that he has no qualms about blasting a company. While most equity analysts express extreme displeasure by changing a "buy" rating to an "accumulate," Byrne's calls can be unequivocally, refreshingly, negative.

Though he has an outstanding record, Byrne isn't always right. In 1994 he was bearish on Atlantic City because he worried that Philadelphia might legalize gambling. That never happened, and though bonds of Atlantic City companies such as Trump and Resorts International sagged for a time, they ultimately performed just fine. On the whole, though, Byrne's recommendations--buys as well as sells--have been remarkably prescient. That, of course, is what makes him an ax. Here are some of the companies he's whacked:

--July 1990. Byrne, who joined Merrill five years earlier out of the Kellogg School at Northwestern, pens a 21-page report bashing Bally Manufacturing and telling investors to dump Bally's bonds. Robert Mullane, then CEO of Bally, who is actually in a meeting at Merrill Lynch when he first sees the report, blows his stack. "A whole pack of Merrill Lynch lawyers descended upon my office," recalls Byrne with a chuckle over breakfast at New York's Plaza hotel. "Within a few hours they were convinced I was right." Senior Merrill officials tell Mullane that the firm sticks by Byrne. Subsequently, Bally misses a coupon payment on its bonds and files for Chapter 11. Arthur Goldberg, an investor who ends up becoming Bally's CEO, later brings the company's banking business to Merrill. "Bally's put me on the map," says Byrne.

--October 1995. Byrne predicts the demise of Harrah's Jazz, a giant New Orleans casino joint venture between Harrah's and other investors. Sell the bonds now, he urges. "One large bondholder called me and told me I was being malicious and that his firm would no longer do business with Merrill Lynch," recalls Byrne. Within a month, Harrah's Jazz files for Chapter 11. The client later calls Byrne back to apologize.

--January 1997. Byrne's ax flashes again. This time he rails against the Stratosphere, a 1,149-foot space needle and casino in Las Vegas built by Vegas impresario Bob Stupak with Grand Casinos. "This one was already in trouble, but I looked at the restructuring agreement and had a very negative feel about the overly bullish projections," he says. The restructuring soon falls apart, Grand backs out, and the bonds drop from $100 to below $80.

--April 1997. Byrne blasts Argosy Gaming, a casino company with some $250 million in annual sales. Argosy used to be a hot ticket. The company made its reputation sticking casinos--mostly so-called riverboats--in newly opened, small markets such as Riverside, Missouri, and Sioux City, Iowa. "Argosy has done a great job, and their new project in Lawrenceburg, Indiana, looks good, but it may be too little, too late," says Byrne. "There's no margin for error." So far the bonds have been treading water, but Argosy's CFO just resigned and the company's president is being replaced. "I just don't like the odds here," says Byrne. Would you want to bet against him?

--Andrew E. Serwer