thestreet.com's take on CCSI/Asensio
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Top Stories: *Update* Manuel Asensio's Short Call on CCSI Sends Stock Diving
By Jesse Eisinger
Senior Writer
6/9/98 2:47 PM ET
In his typically blistering fashion, noted short-seller Manuel Asensio issued a "strong sell" recommendation on Chromatics Color Sciences (CCSI:Nasdaq) Tuesday. "We believe that Chromatics has purposely disseminated such false and misleading information to defraud investors," the analyst said in his report.
As a result, the small New York City medical device company is getting a whole lot smaller today. The stock was down 27.1% to 6 3/8 on heavy volume.
Asensio put out three statements Tuesday over PRNewswire and issued a report on his Web site. Asensio says that the company claims that it has designed a proprietary medical instrument that noninvasively tests for infant jaundice. But the short-seller says there's nothing proprietary about the company's Colormate III and accuses it of having made false claims about the market size. The Colormate was approved by the Food and Drug Administration in July 1997 but has not yet been launched in the U.S., as the company seeks a marketing partner.
An outside spokesman from PR agency Hill & Knowlton said that the company "had no comment at this point."
Asensio also accused the mutual fund company Dreyfus of "covering up" a connection between a portfolio manager Michael Schonberg and Chromatics. He used a syllogism that goes like this: Chromatics Color is a fraud, and Schonberg, with his 22 years of stock market experience and two degrees from the Massachusetts Institute of Technology, invested for two-and-a-half years in CCSI. Therefore, Schonberg must have had some bad motive in buying the stock.
"To this date, Dreyfus has failed to provide forthright disclosures or restitution plans for investors who lost money in this scheme," said Asensio in his statement. In a phone interview, Asensio said, "I have no knowledge of what's going on at Dreyfus. They are attempting a cover-up.
"We've read their press releases and interpret them as a failure to disclose," Asensio continued, referring to releases about Schonberg's position with the fund.
TSC highlighted Schonberg's dubious investment strategies and poor management of two Dreyfus funds in an April 15 story. In early April, Dreyfus appointed a co-manager, Paul LaRocco, to Schonberg's two aggressive growth funds. Since that story, which warned holders of CCSI to "watch out below," CCSI has fallen 50%, from 12 3/4 to 6 3/8.
Dreyfus spokeswoman Patrice Kozlowski, reading from a prepared statement, said, "We take any allegations, regardless of the source, very seriously and are conducting our own review of the facts. Nonetheless, based on our knowledge to date, we believe the allegations are totally baseless and that Michael Schonberg has complied with Dreyfus's personal securities trading policy." She declined to comment on whether there was an external inquiry or investigation being conducted into Schonberg's activities. Schonberg, reached by phone, would not comment.
Asensio also raised questions about CCSI's connection with a "penny stock" concern called Investors Associates Inc., whose principals have been barred from the securities industry.
Dave |
