Thanks Carmine, here it is.
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If I only had a dollar for each time a company blamed its problems on short-sellers only to see its stock price implode as its fundamentals crumbled: I would've moved to Hawaii instead of New Jersey. Which brings us to CHS Electronics (CHSE:Nasdaq). Last week this column ran an item about how the Miami-based electronics distributor, which bills itself as the world's third largest, failed to mention in its earnings press release that the only reason it beat last quarter's earnings estimates was because of a larger-than-expected foreign currency gain. Enter Dow Jones News Service, quoting CEO Claudio Osorio grousing that the recent attack by short-sellers "creates a panic among shareholders and an incorrect perception in the market."
He added that the shorts "are going to have to be ready to swing indefinitely against an ocean of revenue and profits."
Osorio didn't stop there. He spent much of a conference call with analysts Friday continuing his attack on the shorts. According to one participant, who takes copious notes, Osorio said the short position in CHS started to rise around the time "the so-called Asian problem began." He went on to call that "great news" for CHS, because CHS plans to take them on as friends. And that every time CHS makes a presentation, "every time we go on the road, we will talk about the shorts," whom he said "live in the shadows."
One analyst then mentioned that "it's clear to us that Herb [yeah, this one] doesn't have the facts straight [about CHS]."
Osorio's response, relayed by two listeners, was along the lines of his giving "very little credibility to a Web site owned by a hedge fund operator." (An apparent reference to JJC, a minority shareholder in TheStreet.com who works a good five-minute walk away -- way on the other side of the New York Stock Exchange.)
Osorio then acknowledged what CHS investors first learned about a currency gain from the company's 10-Q, but suggested that yours truly didn't take into consideration the tax effects of the currency gain. "This is a little of a smokescreen or grasping at straws," he reportedly said.
He then predicted that over the next 90 days "what you can witness ... is one of the bloodiest [short] squeezes ever."
Somebody oughta tell Claudio that the problem with a short squeeze is that once all the shorts are gone (and, therefore, no natural buyers at lower levels), there's no longer a natural cushion to soften the blow if the stock collapses.
Osorio's war on short-sellers is reminiscent of comments by CML Group's (CML:NYSE) CEO at a Montgomery Securities investment conference six or seven years ago. CML had been the target of widespread criticism by the shorts, so during a speech, he said, "After this we should all get in a room together and squeeze the shorts." As it turned out, CML's stock never went much higher than it was that day and eventually collapsed along with its earnings.
Then there was Paul Jain, CEO of now-defunct Media Vision, whose stock had been a favorite of the shorts and the subject of numerous critical items in this column. After one particularly harsh item, the company's stock rose and Jain called to gloat. "Did you see our stock is rising...I hope your short-seller friends go home and beat their wives,'' he said. Less than a year later his company's earnings collapsed, and the company filed for bankruptcy reorganization.
Bottom line: It's not often a good sign when corporate execs focus their energies on short-sellers rather than the business. It's like a diversion tactic; makes you wonder what they're trying to hide.
On a final note, CHS did not return calls for this item. In fact, they've never gotten back to me.
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