Comments on: The hypocrisy of it all…OSTK and the shorts – The Real Story http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/ the mark cuban weblog Thu, 31 May 2012 20:17:13 +0000 hourly 1 http://wordpress.com/ By: claude http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15059 Mon, 28 Aug 2006 11:04:56 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15059 What is advertised for sale, and what is bought, in the stock market, is stock – not an IOU with none of the rights of a legitimate share, which give the share its value.

]]> By: James Brownfield http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15015 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15015 Patchie Poo,

“Naked short selling” does not violate the principles of supply and demand. On the contrary, “naked short selling” bolsters the principles of supply and demand.

The principles of supply and demand are based upon free, open, and unfettered access to the markets. Furthermore, the role of any market is solely to serve as a price discovery mechanism. The principles of supply and demand serve as a framework to get information from ALL participants into the marketplace. And like it or not, “naked short sellers” are market participants, just like everyone else.

]]> By: W.C. http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15016 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15016 JB,

What you are saying is correct, but if a stock is manipulated up/down with innaccurate and spun reports and that maipulation runs counter to the underlying reality, it can lead to a very favorably/poorly priced secondary which actually changes the IV. That is not a very efficient way for capital to be allocated.

Many companies do not have a choice of exactly when to raise capital because their business requires a steady stream of it. Changing the cost of that capital damages them and not raising it may damage them even more.

It is one thing to say that markets are not always efficient and companies need to cope and plan around things like this. It is another for companies with capital needs to be targetted and manipluated with false and biased reports to create short squeezes or massive dilution.

]]> By: James Brownfield http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15017 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15017 W.C.,

You are still behaving as if you believe access to an unlimited amount of new capital, at prices that only management gets to deem “appropriate”, is a corporate entitlement. If that’s where you happen to fall in this particular debate, then I can understand your objection to “naked short selling”.

Fortunately, most people in the real financial world do not see ongoing access to the capital markets as a corporate entitlement.

]]> By: W.C. http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15018 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15018 JB,

What you are saying is correct, but if a stock is manipulated up/down with innaccurate and spun reports and that maipulation runs counter to the underlying reality, it can lead to a very favorably/poorly priced secondary which actually changes the IV. That is not a very efficient way for capital to be allocated.

Many companies do not have a choice of exactly when to raise capital because their business requires a steady stream of it. Changing the cost of that capital damages them and not raising it may damage them even more.

It is one thing to say that markets are not always efficient and companies need to cope and plan around things like this. It is another for companies with capital needs to be targetted and manipluated with false and biased reports to create short squeezes or massive dilution.

]]> By: W.C. http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15019 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15019 JB,

What you are saying is correct, but if a stock is manipulated up/down with innaccurate and spun reports and that maipulation runs counter to the underlying reality, it can lead to a very favorably/poorly priced secondary which actually changes the IV. That is not a very efficient way for capital to be allocated.

Many companies do not have a choice of exactly when to raise capital because their business requires a steady stream of it. Changing the cost of that capital damages them and not raising it may damage them even more.

It is one thing to say that markets are not always efficient and companies need to cope and plan around things like this. It is another for companies with capital needs to be targetted and manipluated with false and biased reports to create short squeezes or massive dilution.

]]> By: W.C. http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15020 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15020 My view has little to do with naked shorting.

It is entirely based on the premise that our system and country would operate best if capital was allocated as efficiently as possible. To the extent that manipulation of any sort using false, spun, misleading reports/articles or illegal trading techniques plays a part in making things less efficient IMO it is a terrible idea.

When the things being done to profit at the expense of others are against the law, those involved should be put in jail.

I personally am 100% convinced that certain members of the media knowingly engage in reporting that is biased, spun etc… in order to advance the agenda of sources that already have a position.

I feel that way depsite never having owned a single share of OSTK or having ever looked at its financials.

The reason I believe that is because I have owned other companies that been through the sort of attack I am describing where the irrefutable facts were presented to those involved and they refused to change their story. The marketplace eventually vidicated my point of view, but not before damaging the reputation of the company and it’s cost of capital for some time. It just so happens that some of those being accused by Patrick are some of the same people I had the experience with. That leaves little doubt in my mind what is going in and I hope Patrick proves it in court.

On OSTK, naked shorting and the rest of Patrick’s theories etc… I have no opinion.

IMHO, however, his integrety should not be attacked even if it turns out he is wrong about some things.

]]> By: James Brownfield http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15021 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15021 W.C.,

“Naked short selling” is an important element in efficiently allocating capital in our financial markets.

You don’t think that we just leave the capital raise from “naked short selling” lying around in a savings account drawing 0.25% interest, do you? “Naked short sellers” seek to divert capital away from poorly performing enterprises and engaging it with enterprises that are capable of generating superior returns on capital.

Not all “naked short sellers” are correct in their assessments of which enterprises will outperform and which ones will lag, but here again, the effect is to more efficiently allocate capital. Successful “naked short sellers” are rewarded with more capital to allocate through their investment strategies. Those “naked short sellers” who erroneously short companies then have less capital with which to work.

As for Byrne, he is the one who has made the decision to chase windmills. That does speak to his integrity. He is a whackjob.

]]> By: W.C. http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15022 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15022 My view has little to do with naked shorting.

It is entirely based on the premise that our system and country would operate best if capital was allocated as efficiently as possible. To the extent that manipulation of any sort using false, spun, misleading reports/articles or illegal trading techniques plays a part in making things less efficient IMO it is a terrible idea.

When the things being done to profit at the expense of others are against the law, those involved should be put in jail.

I personally am 100% convinced that certain members of the media knowingly engage in reporting that is biased, spun etc… in order to advance the agenda of sources that already have a position.

I feel that way depsite never having owned a single share of OSTK or having ever looked at its financials.

The reason I believe that is because I have owned other companies that been through the sort of attack I am describing where the irrefutable facts were presented to those involved and they refused to change their story. The marketplace eventually vidicated my point of view, but not before damaging the reputation of the company and it’s cost of capital for some time. It just so happens that some of those being accused by Patrick are some of the same people I had the experience with. That leaves little doubt in my mind what is going in and I hope Patrick proves it in court.

On OSTK, naked shorting and the rest of Patrick’s theories etc… I have no opinion.

IMHO, however, his integrety should not be attacked even if it turns out he is wrong about some things.

]]> By: tommytoyz http://blogmaverick.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15023 Mon, 28 Aug 2006 11:04:55 +0000 http://blogmaverick.wordpress.com/2006/04/03/the-hypocrisy-of-it-all-ostk-and-the-shorts-the-real-story/#comment-15023 The Failure to Deliver data for NFI, which became public yesterday, going back to April 01 2004, shows that right around that time, naked short selling in NFI began taking off.

NFI went from 45k failure to deliver shares on April 01 2004 to over 3 million undelivered shares by November 05 2004. The Price went from $66.05 to $43.91 in that time frame. A victimless crime? naked short selling not a problem and not really happening?

Here’s the data for the period in question (failure to deliver each settlement day, per the SEC):

20040402 69,658
20040405 50,792
20040406 70,431
20040407 125,069
20040408 39,567
20040412 71,698
20040413 42,841
20040414 45,182
20040415 135,266
20040416 130,346
20040419 54,555
20040420 41,318
20040421 58,365
20040422 55,665
20040423 70,537
20040426 30,210
20040427 69,815
20040428 81,297
20040429 123,184
20040430 209,285
20040503 91,030
20040504 133,510
20040505 168,616
20040506 205,955
20040507 362,432
20040510 668,417
20040511 836,065
20040512 973,042
20040513 924,721
20040514 894,406
20040517 803,226
20040518 673,413
20040519 474,790
20040520 403,249
20040521 379,303
20040524 370,958
20040525 452,528
20040526 641,398
20040527 541,535
20040528 630,516
20040601 644,893
20040602 714,324
20040603 796,851
20040604 845,450
20040607 852,432
20040608 829,642
20040609 835,213
20040610 902,911
20040611 972,085
20040614 999,188
20040615 1,022,193
20040616 999,247
20040617 1,038,353
20040618 964,888
20040621 955,254
20040622 932,998
20040623 843,287
20040624 851,288
20040625 890,219
20040628 891,805
20040629 917,493
20040630 977,929
20040701 930,063
20040702 902,398
20040706 967,587
20040707 977,528
20040708 991,550
20040709 1,133,898
20040712 1,272,567
20040713 1,239,456
20040714 1,361,900
20040715 1,400,592
20040716 1,403,189
20040719 1,391,914
20040720 1,353,883
20040721 1,193,094
20040722 1,093,450
20040723 1,061,704
20040726 1,073,757
20040727 1,180,605
20040728 1,306,663
20040729 1,248,366
20040730 1,298,280
20040802 1,293,585
20040803 1,282,665
20040804 1,226,105
20040805 1,486,647
20040806 1,446,636
20040809 1,446,636
20040810 1,552,241
20040811 1,644,695
20040812 1,595,485
20040813 1,576,489
20040816 1,551,355
20040817 1,475,930
20040818 1,451,580
20040819 1,406,221
20040820 1,406,301
20040823 1,473,759
20040824 1,528,592
20040825 1,792,835
20040826 1,789,649
20040827 1,830,225
20040830 1,824,857
20040831 1,842,322
20040901 1,799,646
20040902 1,805,372
20040903 1,800,526
20040907 1,981,084
20040908 1,956,356
20040909 1,955,751
20040910 1,822,581
20040913 1,843,148
20040914 1,799,582
20040915 1,798,053
20040916 1,763,213
20040917 1,815,571
20040920 1,857,450
20040921 1,864,354
20040922 1,608,830
20040923 1,607,931
20040924 1,579,196
20040927 1,840,557
20040928 1,778,473
20040929 1,771,646
20040930 1,796,241
20041001 1,847,611
20041004 1,939,484
20041005 1,987,188
20041006 2,084,419
20041007 2,135,635
20041008 2,155,075
20041012 2,168,216
20041013 2,151,987
20041014 2,202,990
20041015 2,190,760
20041018 2,212,717
20041019 2,310,750
20041020 2,400,144
20041021 2,392,318
20041022 2,699,603
20041025 2,876,051
20041026 2,752,003
20041027 2,779,673
20041028 2,675,722
20041029 2,690,597
20041101 2,635,238
20041102 2,783,966
20041103 2,783,966
20041104 2,783,966
20041105 3,143,671

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