Monday, March 06, 2006

News From the High Plains

In the continuing saga of Overstock, which I am following with facination the way I used to watch The Fugitive when I was a kid, even routine corporate tidings are imbued with significance. Thus the Wall Street Journal picked up what it described as an "intriguing filing" with the SEC by the Richard Kimble of this saga, CEO Patrick Byrne.

The filing said as follows:

"Effective February 17, 2006, High Plains Investments LLC pledged 1,000,314 Shares of the Issuer to a commercial bank in connection with the extension of a line of credit by the bank to High Plains Investments LLC. At the same time, Dr. Byrne pledged 494,886 Shares to the bank in connection with the same line of credit."

According to SEC filings, the Journal noted, "Mr. Byrne is a General Partner at High Plains Investments, so this is a bit of two-fer for him. The filing didn't offer an explanation for the transaction."

Well, let's see. Looks like the guy owns a partnership of some kind and it borrowed some money, using some shares as collateral but..... hey..... wait a minute.

Were those "real" shares or were they "counterfeit" shares? In case you're wondering what I mean by that, everyone on Planet Earth except for Patrick Byrne -- and a handful of other advocates of a nutty Wall Street conspiracy theory -- believe that if a share "failed to deliver" in the clearing process it ain't really a share, and they make a big fuss of asking for their cerificates just to be sure that they ain't been "failed." (Doing so also squeezes any shorts that may be out there, not coincidentally.)

It's all a lot of baloney, of course, and Byrne has been embracing this screwball conspiracy theory to distract attention from the fact that his company's stock is in the toilet.

Still, it is interesting to see the distinction omitted from the filing. That is, he didn't say, "the pledged shares were real shares and had not failed to deliver," or somesuch. Byrne seems to think the whole thing is so important that he's had a rupture with the chairman of the company, his dad, over his participation in this screwy crusade. You'd think it would be important enough to put in the filing.

I assume Byrne made that "counterfeit" vs. "real" determination. After all, if they were "counterfeit" shares.... well, doesn't that mean that the whole deal isn't kosher?

Or could it be that, in his heart of hearts, he realizes the whole thing is a lot of baloney?

Anyway, I'm looking forward to the next episode.

UPDATE: Later on March 6, Byrne gave an interview to C-Net in which he implied that his father, former GEICO CEO John Byrne, was getting a little long of tooth and maybe not totally sensible at times. "You know, when you're 74, you feel differently every day, based on what you have for breakfast that morning," he said of his father.

The elder Byrne's had warranted this smear for giving an interview saying that he may step down as chairman of the company because of his son's embarrassing conduct.

Having insulted his own father, it was no great surprise that Byrne lashed out for the umpteenth time at the financial press and "Wall Street." No, he didn't get a peek at Wall Street Versus America. He's not upset with the media failing to run tough stories on incompetent CEOs, or mad at analysts touting stocks, or peeved at the unfair arbitration system.

No, Byrne's beef is that some members of these two institutions don't like Overstock and don't like Patrick Byrne. How wrong they are. What have they been having for breakfast?

FURTHER UPDATE: He later gave an interview saying that the Depository Trust and Clearing Corp. is run by "criminals." I guess he wants publicity or something. Oops! I lost the link.


Wall Street Versus America will be published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site.

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