The Fat Lady Gargles at NovaStar
Rehearsing the "Why Did I Listen to Phil Saunders Blues"
The proverbial fat lady gargled today, preparatory to singing at funeral services for NovaStar Financial, foundering subprime lender and naked shorting poster child.
The company, whose shares had been mercilessly pumped by naked shorting conspiracy theorists such as Phil Saunders of "thesanitycheck.com," was delisted from the New York Stock Exchange and announced dismissal of 85% of its employees. All this happened after the market close today, bless their hearts.
An 8-K filing says the company will be left with 30 employees after the layoffs. Most of them lawyers, I trust.
The stock is down 96% over the past year, and is down 45% in the aftermarket. (Another reverse split, perhaps?)
"Thesanitycheck" is the center of what crooked CEOs call the "market reform movement," but is known to the rest of the world as "the movement to give bad CEOs an excuse for their own incompetence." It clutched to its collective bosom stinky companies like NovaStar. This one managed to rip off pretty much everyone in sight, from its customers to its shareholders, and now has given a swift kick in the pants to its employees. All a source of great pride to naked shorting conspiracy theorists like Saunders because, after all, that is what their "movement" is all about -- to provide aid and comfort to companies like NovaStar.
The role of these charlatans in whipping up an investor frenzy for mediocre companies, ranging from third-rate Internet retailers like Overstock.com to penny stock scams like Universal Express, has been largely ignored by regulators.
The anti-naked-shorting nuts were particularly effective in pushing the shares of this crummy subprime lender.
Saunders established a website called "nfi-info" to push NovaStar in the context of stock market conspiracy theories, creating a mythology that has suckered naive investors to this very day. The site used to sucker investors with crap like "basher myhs," a section that rebutted the true stuff that critics of the company were saying.
The image above is from my personal files, as Saunders took the site down when Novastar plopped in the toilet a few months back. This message board post has a full list of the "myths and their debunking," which are hilarious when you consider that all the "myths" were right on the mark.
Saunders, a former used medical equipment salesman from Irvine, Calif., also posted swill of various kinds, including a shrill defense of naked shorting "victim" Overstock.com, under the pseudonym "Bob O'Brien" on internet message boards.
Saunders, posting anonymously as "Easter Bunny," "dirtydirtydeeds" and other monikers, monotonously pushed the line that NovaStar was a victim of short sellers and not its own business model. Anyone who believed him -- and he had quite a following for a time -- lost their shirts. Saunders hasn't pumped NovaStar lately, for obvious reasons, but his dirty work is pushed by others, even today.
NovaStar never supported nor repudiated Saunders' swill. That's in contrast to Overstock.com CEO Patrick Byrne, who promotes the Saunders website to this day, has openly funded astroturf websites, and has put on the payroll lowlifes who harass critics of the company. His support, however, has not been sufficient to boost thesanitycheck's readership, which has dropped off to nothing in recent months.
So for NovaStar the fat lady is not singing, but she is warming up for an appearance onstage. I think the song she will be singing is the "I Took Stock Tips from An Ex-Used Medical Equipment Salesman Named Phil Saunders Blues."
© 2007 Gary Weiss. All rights reserved.