Short sellers give Nautilus a workout: Resume issue hits shares
Symbol: U/NLS
Subject: FPT
PAPER National Post
PDATE Thu 30 May 2002
EDITION National
PAGE IN1 / Front
HEADLINE Short sellers give Nautilus a workout: Resume issue hits shares
BYLINE Jason Chow
SOURCE Financial Post
COMPANY Nautilus Group Inc. (N/NLS)
Who knew a mistake on a company executive's resume could send a stock sliding fast? But investors are jittery, fearing the next
Enron Corp. accounting scandal, so any hint of impropriety can drag stocks down.
The victim: Nautilus Group, formerly Direct Focus Inc., maker of personal fitness machines including the Bowflex -- and up to that point a red-hot stock in the middle of a major breakout.
Last week, columnist Herb Greenberg at Realmoney.com raised questions about the company's reputation, drudging up some
discrepancies in chief financial officer Rod Rice's biography that had been filed to the Securities Exchange Commission.
Mr. Rice was alleged to have fudged his academic and work credentials, having claimed to be a certified public accountant and
to have majored in accounting and economics for his bachelor's degree. Nautilus scrambled to revise his biography along with that
of chief executive Brian Cook on the firm's Web site to indicate neither are licensed certified public accountants.
For many who hold Nautilus shares (NLS/NYSE) short, bad news is exactly what they want to hear. The company has many non-believers
who want to see the shares lose value. According to the last SEC filing, 27% of the company's outstanding shares are held by short
sellers -- investors who borrow stock, sell it, and turn a profit by buying it back at a lower price.
Though shares in the Vancouver, Wash.-based company have declined 12% since the column was published, analysts have been dismissive of
the short investors and the allegations. All eight analysts surveyed by Bloomberg continue to rate the stock a "buy."
"Next, they'll be attacking the colour of paint at the company's headquarters," retorted analyst Eric Wold at RTX Securities in San
Francisco. Mr. Wold, who has a "strong buy" rating on the stock, said the company has perfected its business model of direct selling. |
