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Overstock Case Moved to March 5, 2012


Parsad
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Given, does the end result always mean that the argument was moot?  In Fairfax's case the company rebounded, so are you going to say that it was only the hard work of the CEO and that there was no organized short attack?  In Overstock's case the company struggled, and because it did so, are you going to say it was only the fault of the CEO and not of the short attack?  It's like saying that someone who smoked and didn't get cancer, proves that smoking does not cause cancer.  Cheers!

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Given, does the end result always mean that the argument was moot?  In Fairfax's case the company rebounded, so are you going to say that it was only the hard work of the CEO and that there was no organized short attack?  In Overstock's case the company struggled, and because it did so, are you going to say it was only the fault of the CEO and not of the short attack?  It's like saying that someone who smoked and didn't get cancer, proves that smoking does not cause cancer.  Cheers!

 

No, I'm saying that the shorts never caused irreparable harm to Overstock and the company's fundamentals are the reason it's trading at $10 a share and been a lousy investment for years.  Could the banks have done something illegal?  I have no idea, but Byrne's nonstop dribble about the shorts for half a decade now hasn't helped his shareholders one bit.  He'd have been better off spending time on running the business and creating shareholder value which he has not done.  In short, the short's got OSTK right.  Byrne would have a much better case if he built an empire and cost them billions in the process.  I'm a firm believer that naked short selling cannot destroy a business.

 

Wait, are you saying OSTK's business has been shit for years because of naked short selling?  Did naked short selling deny OSTK access to the capital markets?    How on earth is naked short selling even partially responsible for OSTK being a $10 stock today? 

 

I challenged you in a different thread to find me even one stock where the shorts have bankrupted a solvent company and have yet to be told one. 

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How about Bear Stearns?  While it's demise was primarily of it's own making, the fact that the shorts drove the price down, limited their ability to finance the business.  The naked shorts didn't cause Bear Stearns to fail, but they certainly made it impossible to get out.  They did the same thing at Fairfax, which survived due to the goodwill of Longleaf, Cundill and Markel.  There are alot of companies in similar circumstances that did not have the luxury of turning to friends with deep pockets.  Overstock also had Fairfax step in to give them a chance. 

 

Your argument is the same as saying "No loan shark has ever driven a debtor into bankruptcy".  You see nothing wrong in the loanshark making a profit, since it is simply a capitalistic endeavor to meet a market need.  I see something unethical.  Cheers!

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How about Bear Stearns?  While it's demise was primarily of it's own making, the fact that the shorts drove the price down, limited their ability to finance the business.  The naked shorts didn't cause Bear Stearns to fail, but they certainly made it impossible to get out.  They did the same thing at Fairfax, which survived due to the goodwill of Longleaf, Cundill and Markel.  There are alot of companies in similar circumstances that did not have the luxury of turning to friends with deep pockets.  Overstock also had Fairfax step in to give them a chance. 

 

Your argument is the same as saying "No loan shark has ever driven a debtor into bankruptcy".  You see nothing wrong in the loanshark making a profit, since it is simply a capitalistic endeavor to meet a market need.  I see something unethical.  Cheers!

 

That's completely ridiculous.  A loanshark preys off of it's victim causing them direct harm.  What does a short or naked short do?  In the case of a naked short, they sell stock they don't borrow to someone else, thereby creating a new owner that shouldn't exist.  How does that in any way harm Overstock?  The only argument that can be made is the selling drives down the share price so much that they can't raise new capital.  I think this is complete bullshit as for every seller there is a buyer, no matter what the float is of a company.  But, let's say you're right.  Overstock has never been denied access to the capital markets.  They could have and still can raise capital if that's what they need to compete.  Their failure is purely the result of a shitty business and bad management. 

 

Bear Stearns, Lehman, Fairfax - these are all financials and different animals.  I do not believe Bear Stearns was solvent.  They didn't even make it till the fall of 2008 when shit really hit the fan!  How someone can claim the shorts ruined Bear Stearns is pretty funny to me.  The financial system collapsed. 

 

You like to point out the Fairfax only survived because they had friends who saved them.  It's just not true.  Fairfax survived because they were solvent and the stock was so cheap people stepped up to provide them capital.  The same would have happened with Bear or Lehman or ANY stock at the right price.  No short can drive a solvent, cheap, business out of business.  Greed will always step up to invest at a good valuation. 

 

 

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That's completely ridiculous.  A loanshark preys off of it's victim causing them direct harm.  What does a short or naked short do?  In the case of a naked short, they sell stock they don't borrow to someone else, thereby creating a new owner that shouldn't exist.  How does that in any way harm Overstock?  The only argument that can be made is the selling drives down the share price so much that they can't raise new capital.  I think this is complete bullshit as for every seller there is a buyer, no matter what the float is of a company.  But, let's say you're right.  Overstock has never been denied access to the capital markets.  They could have and still can raise capital if that's what they need to compete.  Their failure is purely the result of a shitty business and bad management.

 

Rubbish!  How much money did Bear Stearns raise at $3/share?  What about Bank of America without government recapitalization, even though the banking business was solvent?  Who was lending Dendreon money when their stock was getting pummelled?

 

You like to point out the Fairfax only survived because they had friends who saved them.  It's just not true.  Fairfax survived because they were solvent and the stock was so cheap people stepped up to provide them capital.  The same would have happened with Bear or Lehman or ANY stock at the right price.  No short can drive a solvent, cheap, business out of business.  Greed will always step up to invest at a good valuation.

 

Again you're wrong.  Without that $300M injection, Fairfax would have almost certainly been downgraded and would have had a difficult time underwriting many of their property casualty insurance businesses.  There was no one who wanted to lend them money when their shares had been obliterated by naked shorts all the way down to $57, after less than six months being listed on the NYSE.  With the articles being written by Peter Eavis, fuel being fed to other investors, the media and analysts by that slug who worked for the investment company in Sydney, no one was going to lend Prem money other than his friends.  They essentially were driving Fairfax out of business! 

 

That $300M injection gave them time to turn around the insurance businesses, and it gave Dennis Gibbs time to keep the run off businesses from eating them alive.  Once the investments in the credit default swaps worked out, they would never have to worry about reserving in their run-off businesses again.  That $300M saved the company, because the naked shorts had pretty much eliminated their ability to raise funds from the public.  And that is their case...Prem's case:  The spigot to finance their business had effectively been shut off by a coordinated effort to drive their stock price down through the issuance of counterfeit shares.  Cheers!   

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Your BAC and Bear arguments are silly, the market didn't think they were solvent at the time that's why it couldn't raise capital.  It's not a chicken/egg thing.  Bear went to $3 as a result of its perceived insolvency.   

 

Also, capital markets can shut down and that has nothing to do with naked short selling!  In fall of 2008, all companies had a difficult time raising capital at ANY valuation.  Financials are a different breed all together.    Let's keep the argument to Overstock and companies that do not use leverage at 20-1 and are not subject to bank runs.     

 

So you are legitimately claiming that if it wasn't for naked shorting, Overstock would be a different business today?  A more successful business?  That their denied access to cheap/fair capital kept them from succeeding? 

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