Tuesday, June 12, 2007

Sharesleuth 'Business Model' Succumbs to Reality

Mark Cuban's "business model" for Sharesleuth is now, officially, dead. At least that is how I interpret the latest item on the website, which -- for the first time -- concerns a private entity for which Cuban cannot profit by short selling, as he has previously.

When Cuban began Sharesleuth a year ago, he made a big stink about how this was a new "business model," in which he would trade ahead of the stocks criticized in the website.

But the weakness with that approach -- apart from the self-evident ethical issues -- is that it will tend to focus on stocks that can be profitably shorted. After all, if you don't write about shortable stocks, your publisher can't trade in advance on the items and the site must inevitably succumb.

As I and others pointed out at the time (see here and here), a good many bad stocks don't have shares that can be borrowed to permit a short sale.

Sharesleuth has turned out to be a bust, both journalistically and as a "business model." The site has written about a grand total of two stocks since it began last July and, as I said last week, Cuban's shorts have not been cashed out and have not been great money-makers. Indeed, it seems that Cuban was squeezed in one of his recent trades.

Is this the beginning of a new approach at Sharesleuth or just another archtypical Mark Cuban P.R. stunt -- such as the day he spent working at a Dairy Queen? Time will tell.

Hat tip: Talking Biz News and an alert reader.

© 2007 Gary Weiss. All rights reserved.

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

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