Wednesday, May 30, 2007

Mark Cuban Squeezed?

Mark Cuban's Sharesleuth insider-trading project has a new item up on its website -- the first in a long time. Nothing really notable in it, just a hammering away at shady associates of one of Sharesleuth's targets/Cuban short positions, Utek Corp.

What's interesting, though, is evidence of what I've been saying from the start, which is Sharesleuth is a boneheaded idea from pretty much every standpoint -- journalistic and as a business venture. I say that because it looks as if Cuban has been squeezed. Most of his short position in Utek has been closed out against his will.

The latest item contains the following disclaimer:

(Disclosure: Mark Cuban, the majority member of LLC, has a current short position in UTEK of 12,512 shares. He had sold short as many as 90,488 shares, but most of those were bought in over the past few months. He did not intentionally cover his position. Cuban also is short 10,000 shares of Xethanol Corp.,another company that is mentioned in this story. Christopher Carey, editor of, does not invest in individual stocks and has no position in the shares of UTEK or Xethanol.)
Note the discrepancy between the above disclosure and Cuban's most recent one, on Feb. 25, in which he reported having a 99,000 share short position.

Remember that Sharesleuth reported on Oct. 25 that Cuban had a 75,000 share short position at an average of $20 a share. That did not go up as of Dec. 12, according to a comment on Sharesleuth.

So obviously the 24,000 (or was it 15,000? What happened to that 9,000?) shares were shorted between Dec. 12 and Feb. 25. As you can see, the price of the shares hovered mainly in the $10-$12 range during that time.

And then, after Feb. 25, kaboom! The Big Squeeze. Look at the chart. Stock bounced up to $18 and now is at about $15. Oh my. Sometime after Feb. 25, Cuban's broker bought the shares back -- the hated "buy-in." I imagine he realized some kind of profit on the shares he shorted at an average of $20, but he would have taken a loss on the shares he shorted over the winter.

He certainly wasn't able to keep the short position as long as he had wanted. Poor dear.

My point is not to gloat (well, not entirely to gloat) but rather to point out that this so-called "business model" ain't working. You can't reliably finance a "news operation" by trading ahead of the stocks you write about. Cuban is proving it with his Utek buy-in imbroglio. Apparently you can't make more than pocket change doing this.

Still wanted is the public-spirited billionaire who will finance a financial investigations website without thought to personal profit. Does such a creature exist?

© 2007 Gary Weiss. All rights reserved.


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

Labels: , ,

Links to this post:

Create a Link

<< Home

Enter your email address:

Delivered by FeedBurner