Sandy, Mark Haines did a good job given the predicament he was put into.
He highlighted the main issue which CNBC now has to grapple with as Cramer seeing the stock on the list and then trying to short it (or some variation of this phrase) prior to co-hosting the show and described all the rest as "noise". I wish I had seen the original WAVO interview.
I'd argue that it hinges on the definition of "trying to short", "attempting to short", etc. and Cramer's intent in taking whatever actions he did re: WAVO prior to hosting the show.
archive.thestreet.com
I asked my trader to find out if WavePhore could be "borrowed," and whether 25,000 shares were available. Before you short a stock, you must see if it can be borrowed because you are selling that borrowed stock. (If you owned it, you would have a long, not a short sale.) My trader called me back a moment later to tell me that WavePhore could not be shorted because it could not be borrowed. In other words, Goldman Sachs would not allow me to short the stock, because after I sold it, Goldman would not be able to send out any shares from its vault to complete the trade.
So he gave his traders instructions to short 25,000 shares of WAVO or did he have his trader see if 25,000 shares could be borrowed? Clearly the latter.
Why?
archive.thestreet.com
In my zeal to demonstrate how a short squeeze works, I made it a point on the morning of the show to find out if WAVO shares could be borrowed. I had no intention of shorting WAVO; I just wanted to demonstrate that it could not be borrowed and was therefore subject to a short squeeze that could explain some of the stock's behavior of late. I had my firm check to see if it could be borrowed so I could be a more effective co-host, as I never intended to trade the stock. I was just doing my job as a communicator of what is going on out there. The controversy is being reviewed by CNBC. Until the review is finished, you should not expect me on "Squawk" again.
Elsewhere in the same piece:
As many Internet-related stocks have had similar bolts, and I fear that the people who watch CNBC will get gaffed when the squeezes on these stocks subside, I wanted to be sure people know why I think, in part, these stocks are ramping in this fashion. I never intended to short WavePhore -- I couldn't anyway, it would never be allowed.
I believe him.
Not because I like him, but because I read him and I am familiar with the pedagogical strain that runs through his writings. That is largely why I read him. Jim Cramer didn't suddenly come up with this educational tack to get himself out of a tricky situation ex post facto. He's been trying to make his readers more savvy about how the market work ever since he started TSC. What he did and his explanation is totally consistent with his prior body of work.
Not because I like him, but because I've done what he's claiming he did and I'm sure a lot of other people have who have had their intellectual curiosity piqued about certain stocks from time to time. Has anyone out there ever thrown in a sell-short limit-order with absurdly high prices just to see if a stock was shortable/borrowable without having any intention of actually bringing the limit down to a realistic target if in fact it is borrowable? I remember doing that back when KTEL first went ballistic even though I wanted no part of it if it was borrowable. I do that because I have an on-line broker. He has a trader who can talk to another human being and ask point blank whether a stock is borrowable. I did that because I was butting heads with someone here on the KTEL thread at the time and felt an intellectual imperative to be as informed as possible. He did what he did because he's about to go on CNBC and interview the CEO of a company which had nearly tripled and felt an intellectual imperative to be as informed as possible.
Why is this so hard to understand?
Maybe because the great legal minds at CNBC somewhat are divorced from reality having never sat at a desk and traded over a sustained period of time. Given the pace at which the lawyers seem to be grappling with the oh so difficult task of writing a simple statement (hitting a fixed target) this would seem to be a wise decision.
I would suggest their "statement" contain the total billable hours used in its production so we can come up with a $/word figure.
Good trading,
Tom |
