Monday, December 17, 2007

'Doing Them Slow' Redux


Why is that man smiling (as if we didn't know)?

Overstock.com CEO Patrick Byrne once famously issued a vague, typically nutty threat to his "opponents" (by which I assume he did not mean "the truth" and "common sense"):

"I plan on doing these guys slow. "

It seems that this revenge fantasy has backfired on Byrne in recent days, with a spectacular decline in Overstock shares.

The decline began on Dec. 10. Since then, and counting today's 6.2% drop, the shares have declined from 23.84 to 15.11.

That's a 37% decline in a little over one week, much of it attributable to Byrne blurting out bad news on margins while preening on CNBC (left) and his lawyers hyperventilating as a result. But the shares have been spectacularly weak even after his latest big-mouth imbroglio.

Since Oct. 31, the shares of this naked shorting poster child are down 61%. Could it be that a conspiracy of nefarious forces, such as the ones that have beset Byrne's brethren at Universal Express, are to blame?

Or could it be.... wait a minute. I think I just figured out who those "opponents" were that Byrne was talking about. Of course! (Sound of hand slapping forehead.) He was talking about his shareholders!

Hey, he's not a perennial on "worst CEO" lists for nothing.

Meanwhile, Zac Bissonnette points out in Bloggingstocks that on Monday Overstock dropped off the "Reg SHO threshold" list, which is commonly twisted by crummy companies to claim victimization by the scourge of "naked short selling."

Zac suggests that "with Overstock off the list, perhaps Dr. Byrne will end his self-proclaimed "jihad" and go back to doing a lousy job running his terrible company."

Here's more food for thought: Overstock dropped off the Reg. SHO list after a period in which the stock was down substantially. If the stock was an actual victim of naked shorting, and dropped off the list as a result of short covering, the stock should have gone up, and not fallen off a cliff.

In other words, Byrne's claims of naked shorting were a load of bull -- something the SEC, if it is not brain dead, will be sure to notice in its ongoing investigation of Byrne and Overstock.

Byrne rationalized the obvious disparity between myth and reality with a press release in which he repeated a screwy theory advanced earlier this year by Universal Express ex-CEO Richard Altomare. A comment about the SEC ("displaying its customary deference to criminal elites") would seem to indicate that the formal SEC investigation of Byrne and Overstock is not going to his liking.

© 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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