Michael, I have been busy too.
I came back to this board and I see Wexler posting recycled lies again. I like originality and he is very boring.
Back to your point. I agree that a company should focus their defense on whatever is the purported problem.
What can be confusing is when the accusations are intertwined with the people making them and with their other actions. For example, if an analyst downgrades your stock with misleading statements just after you turn down their firm for other business, and you also find out he has shorted shares of your company, should you focus on rebutting the allegations or attack the analyst?
Some allegations can not be responded to in any serious way. A simple denial may not work and a denial of predictions for the future is ridiculous. If the analyst predicts your earnings will drop next year, how can you easily prove it until the year is well along?
With AREM, I have no idea what they were doing and it is still not open for trading so it looks worse and worse. I hear it has been halted many times this year. I can see some of the investors selling simply to get out and not be in a stock that is not liquid for periods. They have no assurance that all problems will have been found and no new ones may not come along later to halt it again.
I do draw a line between the needs of a company and the needs of investors. For example, if an investor planned on holding a stock for 12 months and then hoped to sell it for long term gains and put the money elsewhere, then they may be truly annoyed if a short is shorting heavily just when they are ready to cash out. But, it remains legal to short - within the rules. If the short is stupid enough (as Asensio clearly often is) to go PUBLIC with allegations, the investors can pick him as a target. He is fair game for lawsuits and must defend himself and prove his allegations. The stockholder can also avail themselves of any tricks that let him thwart the short within the rules. He can ask for shares in certificate form, for example.
If a group of stockholders get together and use techniques like this, it is no different than a group of shorts working together to take a stock down. Neither directly casts any aspersions on the company and its practices.
Suppose someone like John Malone owed 30% of a company and wanted to sell his shares to another entity for a premium and the price got knocked down by shorts. That messes up his plans because he wants a higher price. Can he cause a squeeze? Again, he can by the rules. Can he motivate the board of directors to adopt policies that help him? With 30%, he may be able to swing it, but he can also do a proxy and get others to support him. Together, stockholders may be able to influence the company. In this case, is the company guilty for resisting using these tactics? I say not necessarily.
When the company itself devotes too much resources trying to silence detractors without addrressing any facts, that can be more damning. We have all seen lawyers seriously abuse due process in many aspects of society. The delay can often make a potential winner lose. Witnesses get old or die. Smokers, especially, often die before the case even gets to trial. Enough time can make the point moot. If you can keep a women from having an abortion for 9 months, the baby has been born. (Not a real example, but you get the idea.)
As I have said earlier, AREM does not concern me except as an example of what happens when management and the shorts go at it. I am not clear how much of the resistance was orchestrated by AREM management who may have known there were problems and how mcuh by shareholders like Jacobs who arguably were deceived. |
