Wondering why FTEL, RECY and the rest are so low? This explains a good deal.....
Hey boys, don't let the door hit you on the way out......
Article in American Metal
Market
GS20002
Oct 20 1998 5:41AM EDT
Recycling Industries shares shorted
By EDWARD WORDEN
NEW YORK, Oct. 19 -- Why are so many investors "shorting" shares in Recycling
Industries Inc., hoping the price drops even more than it has recently so that they can
cash in on the way down while conventional investors are suffering?
According to Thomas J. Wiens, chairman and chief executive officer of the Englewood,
Colo., company, one tool being used in the shorting phenomenon is the Internet,
specifically the financial message boards, or chat rooms, that grant anonymity to the
contributors. Wiens was sharply critical of the message boards when he chatted by
phone with analysts late last week, following news that Recycling Industries had to ax
250 employees because of hard times.
"Our short interest continues to climb," Wiens said of those who "enjoy the ride on the
way down." He said there are well in excess of 250,000 short interests.
"It seems unusual that we would have any shorting at this level," he said, alluding to the
price of around $1 per share vs. $6 per share in June.
At that point, Wiens turned to what he said is a related topic--negative comments about
the company.
"These message boards are a real problem for companies," Wiens said. "We've laid off
a lot of people and there are changes in our company ... there are people who don't have
a lot of other things to do, and they spend their time in chat rooms.
"I've had the opportunity to speak with some government people and other CEOs. This
is a systemic problem, all around the country, it is getting worse. There are about to be
Senate hearings on this, to do away with the anonymity people have in these chat
rooms. And I think I might actually be testifying on how these things work."
Wiens said other chief executives have told him that some of the chat room messengers
attempt blackmail "saying that they will stop doing this stuff if you pay up."
He told the analysts that "this is something that really needs regulatory reform."
On the financial message board at Yahoo! dedicated to Recycling Industries,
contributors range from the upbeat, who predict a turnaround for the scrap market and
for the company, to those predicting disaster.
In the latter category, one insisted Friday that "the company has worked hard to lose
money and mislead investors." Another said there was a recent resignation of a board
member that went unreported by the company, which he said violated SEC regulations.
There were so many disparaging comments on the message boards about Philip Services
Inc., Hamilton, Ontario, that the company successfully petitioned the Canadian courts to
have the message senders' identities disclosed by such Internet service providers as
Yahoo!
© 1998 Chilton Media Inc. All rights reserved.
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