Re: 8/31/05 - [OSTK] Patrick Byrne: Message No. 869 from the OSTK Motley Fool message board
From Dr. Byrne, Part 1 of 3
by: ninkiga 08/31/05 03:16 am
Msg: 41405 of 41529
Message No. 869 from the OSTK Motley Fool message board:
Fools,
Now I will turn, once again, to the work of Mr. Jayson. In the interests of full disclosure: I am biased here. I know plenty of people who make good arguments against my actions. In fact, Tom and others here have done so tonight, and have, I think, illuminated a real dilemma, and argued its various facets convincingly. But their arguments are real arguments, not laden with glaring logical fallacies or hard-baked with false premises. I do not find Mr. Jayson's work equally compelling. In fact, I find it so programmatic, it is hard for me to conceive that his false assertions and obfuscations are not deliberate. (Why would any Fool purposefully work so hard at spinning things, rather than abide by the normal Fool etiquette of trying to work through a problem and share his results? I would have to be far more conversant with the entire body of Mr. Jayson's work to venture a reply.) That said, I have learned when someone takes such trouble to bake false premises into questions, lengthy discussion is largely a waste of time: he is flogging a Party Line, facts be damned. Therefore, I think I will dispatch these issues briefly, as I doubt very much he fully believes his Party Line points himself.
Mr. Jayson: “[Vexas says] He states that the lawsuit is not about shorting. You say yes. He says no.
Sorry Vexas, but you are wrong on this point. It is about shorting, though Dr. Byrne has made great attempts to reassure us all that he has no problem with "legitimate" shorting.”
Sorry, Mr. Jayson, you are simply wrong on this point. The lawsuit is not “about shorting,” it is about an unfair business practice: one hedge fund paying a research house to prepare putatively independent research while providing it to that client before others, allowing that client to edit it, and delaying publication to suit that client's trading purpose. It is no more “about” shorting than a lawsuit alleging sexual harassment in the workplace is “about” sex. The pattern of facts we are alleging could have supported a lawsuit (mutatis mutandis) whether the defendants were short the stock, long the stock, betting in favor of volatility in the stock, or betting against volatility in the stock. The reader can, of course, see this for himself by simply reading the lawsuit, the first page of which lists “unfair competition” and “negligence” as the only causes of action, or checking to see that the statute under which it was filed (California 17200) concerns unfair business practices, not stock manipulation, stock prices, shorting stock, or anything related to stock. This is such a basic, obvious, indisputable fact, Mr. Jayson, your mantra-like repetition of the claim that this is, “about shorting,” seems to me to be mere flogging of a party line.
“The lawsuit makes no mention of naked shorting, but Dr. Bryne (sic) and his friend the Easter Bunny O'Brien continue to conflate the two when speaking and writing in public.”
No, I don't. I suppose giving an example to support such a claim is onerous to one who is dealing in Received Truth. I can give you example after example of where I took great pains to distinguish this lawsuit from the naked shorting issue (webcast, appearances on CNBC #1 and #2, my reply to your 12 questions, etc.)
”And here's one for extra credit. Can anyone give me a list of companies that turned out to be long-term successes, which companies had CEOs that have engaged in such public scraps with short sellers?”
Nope. So what?
By the way, did I mention that it is not “short sellers” per se with whom I am scrapping, I am scrapping with a hedge fund and a research house that's on the take: why is that point, crystal clear to everyone else, simply too arcane for you? My guess is that you repeatedly gloss over this so you can try to make this a“CEO versus the shortsellers” story, so you can point out that CEO's who fight short-sellers lose. My read of this board is that not a single reader is falling for this.)
”Dr. B. sort of claims that Overstock has already been taken private. I'm not sure what he means by this, because obviously, when institutions own more than 9 million tradeable shares, you're not really private.”
Again, every other reader seems to understand a point that you pretend is too arcane for you. Of course I don't literally mean that we have taken it private: I mean that the ownership is now so concentrated that a couple dozen people seem to own all the legitimate stock.
“But brushing this aside, perhaps Dr. B. could tell us how he gets to the "100%" figure he uses to describe the locked up ownership of overstock. According to his recent filing, he owns 6.3 million shares. J. B. owns 1.3 million as of Feb, 2005. That's 7.6 million out of 20 million. Add Krevlin and we get to 8.6.”
Sure. Just look at my earnings call, the transcript of which is available on our site, where I walk through the numbers in great detail. ( cf. August 3rd entries in www. shareholder. com/overstock/MediaList.cfm ).
By the way, you are off on what I own, off on the total shares outstanding, neglected the holdings of other members of the Byrne family and several non-institutions quite close to me, and the top 10 institutions and mutual funds, all of which were listed in detail in the conference call of several weeks back. I find it unimaginable that, given your interest, you have not actually read it. Thus, this question is just more blue smoke and mirrors.
”I'd still love to see a discussion of exactly what the lawsuit's short conspiracy and/or the more nefarious alleged naked shorting”
The lawsuit does not allege a short conspiracy, Mr. Jayson, or a naked shorting conspiracy. Again, are you just counting on the hope that your readers are dumb or will not have been following this closely?
“are actually costing OSTK shareholders or OSTK the company. Numbers, please.”
Wait like everyone else, please.
”I'd also like to know how heavily shorted companies like NFLX, and the others I mentioned in '12 questions' can withstand these naked short 'attacks,' some for longer periods than OSTK, and see big gains in the stock price.”
Well, where do I begin deconstructing your false premises, Mr. Jayson? Your hidden assertions are: that this is about “naked short 'attacks'” (false); being “heavily shorted” (false); the fact that some have gains in their stock price while being naked shorted mean that naked shorting cannot be responsible for hurting companies (false: “yes officer, I threw rocks at those two windows, one broke and one didn't, but how can you blame me for breaking the first? The fact that the second one did not break proves that throwing rocks doesn't break windows!”) You pretend that this is about stock prices rather than an unfair business practice among named parties (stock price is simply one way, and maybe just one way of several, of calculating damages). You leave out the numerous stocks that are on the Reg SHO list that have seen a decline in their stock price (e.g., NFI, TASR). And so on and so forth, etc.
I have no idea why you bother, Mr. Jayson. You seem to assume that folks are so dumb that they won't see through these transparent deceptions. When in your “12 questions” you lied that I had said the “only” evidence I had were some affidavits, I had a feeling about you, which is why I posted the link to the actual interview, so readers could see for themselves how bald was your lie (as you lied in a follow-up email to me and Bill Mann defending this error). Now I have just revealed lie after lie after lie after misstatement after false assumption after lie. Frankly, this is not even what I would consider an interesting debate, and in my experience, far fewer observers fall for this kind of nonsense than its practitioners suppose (although I note that in academia people argue like this constantly, and kid themselves that they are getting traction). We can keep on playing at this, but in my experience anyone who gets so many things this wrong is doing so purposefully, which means you have an agenda, which means you are not interested in the answers anyway but for that they provide fodder for some further misconstruction, and so on and so forth. We could continue, but there is no point in doing so in such an atmosphere of deception. I think I have given you enough time.
Sincerely,
Patrick
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