A Wall Street 'Short' Is Part Investor, Part Detective
By ALEX BERENSON
nytimes.com
"Earlier this year, short-sellers raised questions about whether AremisSoft had overstated the value of a contract to overhaul the Bulgarian health information system. AremisSoft's stock plunged after reports in May in The New York Times and TheStreet.com about the discrepancy. In response, AremisSoft has announced a plan to force shareholders to trade in their stock for a new class of stock. Short-sellers say that plan is little more a thinly disguised effort to provoke a short squeeze.
Irwin L. Jacobs, a Minneapolis financier who owns 9 percent of AremisSoft, pointed out that Rocker Partners owns two million shares of TheStreet.com. "Isn't it a coincidence," Mr. Jacobs asked in a posting on his Web site, "that Herb Greenberg from TheStreet.com is also one of the biggest critics of AremisSoft and has been working overtime to try and destroy AremisSoft's credibility while one of his largest shareholders has been shorting AremisSoft stock?"
Mr. Cohodes called the accusations nonsense and said his relationship with Mr. Greenberg, a senior columnist for
TheStreet.com, dated to Mr. Greenberg's days as a columnist for The San Francisco Chronicle. Mr. Greenberg said: "I've been working overtime to try to get AremisSoft to answer some questions that they haven't answered yet."
Mr. Cohodes also said Rocker's investment in TheStreet.com, which has fallen more than 90 percent, was a mistake. "We don't need to lose $20 million to get quoted."
On Thursday, AremisSoft sued TheStreet.com, Rocker Partners and several other short-sellers and brokers, contending that they manipulated AremisSoft's stock price by disseminating false information about the company. TheStreet.com said the accusations were baseless.
The suit also disputes some facts in articles in The Times.
The mere mention of AremisSoft, meanwhile, amuses Mr. Cohodes and Mr. Montgomery. The company has gone "from announcing a $37.5 million Bulgarian contract to announcing a $575,000 contract with Shire Inns," Mr. Cohodes said of a recent AremisSoft news release.
And as he talks of AremisSoft, Mr. Cohodes' eyes light up just as they did at the racetrack a day earlier. "The problem with us is that we just keep finding scam after scam after scam," he says. "This is what we do, you know. This is what we do." |
