Overstock
I’ve been reading more about this nutbag Patrick Byrne’s war against naked shorting. I’d heard about it from Mark Cuban’s blog long ago, but didn’t realize how crazy this dude really is. He believes there is a vast, market-wide conspiracy wherein people are using naked shorts to drive down his company’s share price. So he spends what would appear to be the majority of his time fighting against the “Dark Sith Lord”, as he calls him, who is orchestrating it all. His use of that term in this particular context isn’t really surprising, given that he apparently has a hard time distinguishing between bad fiction and reality. He’d make a great Scientologist.
I’m no expert on what corporate executives should be doing with their time. My corporation only consists of three people, so though I am actually a CEO, it’s mainly just a technicality. My actual job is as unexecutive as they come. Today I even printed some business cards from my little inkjet. I bet a lot of people at the helm of Fortune 500s do that, right?
But if I were a real CEO, I would be going about his problem in a very different way. Naked shorters are betting that your stock will sink, and I really can’t think of any better way to make it do so than to expend a significant portion of your energy fighting Sith Lords. I’d just work to make my company make more money. If Overstock managed to crush analyst estimates for the next few quarters, everyone involved in the conspiracy would lose their mortgages. It’s not possible for a group of people to hold down the price of a company that’s on fire. The market is just too overwhelming, they’ll just get steamrolled.
So I’d just do everything I could to double my company’s profits in no time. That has the added benefit of making yourself and your shareholders a boatload of money too, which, in reality, is what you’re supposed to be doing anyway. So if there was a conspiracy it would be destroyed, and in the more likely case there wasn’t, well, I’d at least get some CEO of the year awards. And I would have the honorable distinction of running the first publicly traded corporation to have the line “Suck it, bitches” in their quarterly statement.
May 28, 2007 at 10:08 pm
Right, and in fact after a speculator has sold shares short, he’s the CEO’s best friend because he’s on the hook to buy that stock back. Sure, he drove down the share price when he first sold short, but once that’s over, he’s a positive influence.
In fact, since the total open short sales for a stock is publicly known, it’s questionable just how much influence short sellers have. If a stock’s open short sales have jumped while its price has dropped, the market might well revalue most of the drop. Or not. I guess the market might wonder what inside information the short sellers know.