The Worst Stock For 2007

Seth Jayson has an excellent article in Motley Fool on the "worst stock of 2007," which just happens to be the Baloney Brigade poster child, Overstock.com.

It's no surprise to me that Overstock is having such difficulties. Companies that shift blame to short-sellers are almost invariably dogs. It is one of the most flaming-red flags there is.

Meanwhile, more interesting details have emerged on Judd Bagley, hired in August as "Director of Social Media" by Overstock.com CEO/conspiracy theorist/ journalist-taunter/short-and-analyst-suer/miscreant-blamer/ Worst CEO-wannabe Patrick Byrne.

In an October 2005 post by "writerjudd" (Bagley's Internet handle as you can see from the URL to this link), Judd described himself as follows: "I do political PR mostly. I'm especially good at 'strategic' messaging, which is code for embarass the opposition in the press."

Bagley materialized again, in tandem with Byrne, on the "sanitycheck" conspiracy theory website to demonize and taunt Business Week reporter Tim Mullaney. Bagley's and Byrne's comments (as "writerjudd" and "Patrick") can be found here. Mullaney was researching a critical article on Byrne and Overstock that Byrne successfully countered -- by taunting and personally attacking Mullaney. I have no idea if these vile tactics worked, but I do know that the article never appeared.

I noted previously that this former radio traffic reporter used his dirty-tricks talents on behalf of Byrne earlier this year. He is the creative brain behind two nauseating websites that ridiculed Byrne's critics via digitally manipulated videos.

Obviously Byrne is putting his money where his obsessions are. Too bad his shareholders have to suffer because of it.

Seth's Motley Fool article makes the following good observation:

We're talking about a CEO who lashes out at anyone critical of his performance. Once, on our Fool boards, he suggested -- without so much as a thread of evidence -- that I was taking bribes from some member of the anti-Overstock conspiracy. When that post was removed by our moderators, he then lashed out at all of Fooldom, and bid us adieu, writing:

"More and more I came to feel that the Fool had been infiltrated by representatives of the bad guys & I figured I would do a last poll to ask, how many others suspected that the Fool had been corrupted as well? There were several shills on the board at that time I posted the poll, adn [sic] they all immediately answered that I was a nut (one of the possible poll responses). But as the evening wore on, we got around to the point that well over 50% believed the Fool had been cirrupted [sic.] and my antagonists there were shills. Sometime the next day, as I knew would happen, the shills were able to organize getting as many of the shills to come vote against the propoisition [sic.] that the Fool board had been corrupted (the disparate voting by time of day was astonishing and not statistically likely), but even with that, fully 36% of the Fools now believe their environment has been corrupted by shills."

See how nifty that works? When people voted with Byrne, it was evidence he was right! When the tide turned, it was evidence of a shill conspiracy, so Byrne got to be right either way!

I'm sure this kind of mental exercise is a wonderful way to justify aberrant behavior, but it's no way to run a company. On viewing these antics, one of my Fool colleagues -- who was once long the stock, as I was -- put it thusly: "This guy isn't qualified to run a lemonade stand."

That's just one issue, albeit the most obvious one. There are several others, including a total absence of board oversight while this CEO runs amok, making wild charges, and generally making a mockery of the concept of "corporate ethics."

Update: Bagley later confessed to running Overstock.com's antisocialmedia.net smear site. See this subsequent post.

© 2006 Gary Weiss. All rights reserved.

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