I like many others are always looking for good due diligence to base trading strategies around. It is too bad that Christopher Byron resorted to journalistic double talk and insinuation to create fear, doubt and uncertainty in a security whose story has all the ingredients to be valued like other profitable Internet companies.
If you read his article, you'll notice that he resorted to a few tricks to protect himself and allow others to draw false conclusions:
1. He starts by giving himself credibility by making a statement that he doesn't substantiate:
"I, AMONG OTHERS, have been writing about the developing speculation in Internet stocks for well over a year now" YEAH RIGHT...
As if he was one of the originals who was telling everyone that the Internet is the place to be. But, completely not related to the rest of the story, in fact he appears to be more of an opponent to Internet valuations.
2. He refers to the SEC as being negligent, maybe they are corrupt too. Maybe everyone is corrupt except for himself of course. Oh, did he mention that he is being accused of stock manipulation and being aligned with notorious shorters in NY and Florida?
3. "So I doubt anyone at the SEC or Nasdaq or anywhere else will be rushing to ask why it was that an obscure Nasdaq SmallCap stock named 800 Travel Systems Inc. (IFLY) sold for $6.75 last Wednesday yet by 4 p.m. Monday was selling for $16.12."
They do not need to rush and ask why, they did their simple DD and realized that the company has been testing their internet site for a couple of months and the release of the final product is imminent. Tell me does EBAY which is losing money in a low margin business, deserve a better valuation than a company that is profitable and releasing a unique Internet application that preserves their higher commissions and margins. In fact that may make them more efficioent and decrease their cost of doing business while fueling their rapid growth...
4. "One good place to start looking for answers would be the co-underwriter of the company's IPO: First Liberty Investment Group Inc."
Why, because they had one or two employees investigated. Every firm on the street has had to deal with crooked employess, that does not make the firm crooked. Does that mean that Smith Barney is crooked, because they have had more than a couple of employees go bad. This guilt by association does not stop there:
5. "prior to joining IFLY's board he served as a senior vice president of a now-defunct Boca Raton swindle-shop, Euro-Atlantic Securities" Did he call Mr. Guadagno and ask him why he left that firm, maybe because he did not want to be associated with them. In fact NASD would not have allowed IFLY to go public with a corrupt director, so NASD and the SEC evidently feel that this director is pure as the driven snow. His statement either shows a gross lack of understanding of the IPO process or he is intentionally trying to mislead the public. But we will have to ask him that question. Only he knows the truth about his motives.
I do know that a lot of shorters (not the most well respected people on the street) are bleeding and his article although lacking in substance, sure would help them out... |
