Today, in the middle of a progressive short squeeze for BlackBerry (NASDAQ:BBRY), rampant selling appeared out of nowhere to drive the stock price down. What was the awful news? No one knew.
Bear raids are illegal. Selling stock for the sole purpose of driving the price is outright manipulation and a banned activity in most capital markets. Basically, if you are going to sell the hell out of BlackBerry, you need a reason to do it, otherwise you could get investigated. You need a cover story.
Shorts - Using Obscure Analyst and Tech Media Editors for 'Cover'
I wrote an article for Seeking Alpha last February that described in detail how this fraud is perpetrated "BlackBerry And Forbes: Battleground Stocks And Headline Risks". In this article, I showed you the symbiotic relationship between Brian Blair of Wedge Partners and Eric Savitz at Forbes (Savitz's since left Forbes). In that article I showed you, without any doubt, how Blair had expressed an 'opinion' and Savitz turned that into a horror headline that was used to "paint" BlackBerry during a bear raid. Suddenly, Brian Blair's 'opinion' became a statement of fact courtesy of Forbes.
You see, shorts cannot just sell out of the blue to cause a panic for no reason; that would be a bear raid. As a workaround, the shorts in the BlackBerry battle use small, lesser known, analysts as their PR flack, their cannon fodder. They are not really analysts. Yet why is it that when Brian Blair puts out a report, it gets picked up used to make helter-skelter Halloween headlines… out of what are simply his opinions! Yesterday's horror was nothing but his 'estimates' again:
"We believe BlackBerry has trimmed their production expectations for the Z10 for the remainder of calendar year 2013. We estimate that the company may have trimmed Z10 production units by 4-6 million units for the year. If accurate..."
This is just a replay of last month's Forbes fiasco but with Barron's tech desk doing the heavy lifting through Tiernan Ray. (Forbes has revamped its editorial tone since Savitz left and these gents can't find much air time there). Ray just re-printed large quotes in their entirety without caring to comment or even think about what he was doing. In fact, he never questioned the source of the information. Compare Barron's coverage to Bloomberg's coverage (Professional journalists):
"The company may have cut 4 million to 6 million units, Brian Blair, a Wedge Partners analyst, said today in a note, without saying where he got the information."
Those journalists pointed out quite clearly that there was no stated fact behind these "thoughts" conjured up by Wedge Partners. How a little known analyst can conjure up a "thought" and turn it into a fact that, with Barron's help, wipes hundreds of millions of dollars in market cap from BlackBerry is beyond belief. Only in America can such journalism still exist.
The BlackBerry shorts feed the journalist who, knowingly or not, help scare people and provide a "cover" for the bear raid. Tiernan Ray's second quoted analyst is a short favourite and a man I've pursued with great success in the UK: Pacific Crest's James Faucette.
The UK Guardian newspaper ran a story largely quoting James Faucette concerning BlackBerry's failing to pass intelligence services new security checks.
Oh I'm sorry, is the link broken? That's because the story was a sham. The title misled and let people believe BlackBerry had failed a test, when in fact the test had been revamped and scheduled for summer 2013. So yes, while it was true that BlackBerry was not certified for the new system, it had not failed as no one had passed. Hilarious! I called the UK Government Security desk that morning and managed to have them put out a statement in an hour refuting this. They did it and I shopped that to The Guardian and threatened them with a Press Complaint if they didn't pull the story. They pulled it immediately after I told them about Faucette and the pain of sister newspaper the UK Telegraph was already going through because of another of James Faucette great stories…
Oh yes. Him again. Remember the "UK Price BlackBerry Slashing Story"? Well I've had a bit of back and forth and the Telegraph has already largely redacted the story but refuse to retract it. Now it's going to a formal inquiry. (Please feel free to contact the UK press complaints office and voice your support here.) The only defence I seem to have gotten from the Telegraph legal department was that it was not their story as they were just working off a story from…you guessed it…Tiernan Ray at Barron's! Wunderbar!
The question that needs to be asked now is who is organizing such a well-oiled PR machine? Who has the power and reach to mount such an attack?
Rumours have Suggested Maverick Capital amongst the Prominent Shorts; I Think It's Not True, Here's Why:
As a writer on SA, I hear lots of rumours. Currently speculation and rumours have only conjured up one name, Maverick Capital run by Lee Ainslie III. Now he is one of the smartest and shrewdest investors out there and he has amassed $10B Fund. Pas mal? I'm sure he is not the gentleman behind the short position here.
Maverick would certainly refute such innuendo. This hedge fund and its investors are from such a high pedigree that they would never willingly be associated in the activity above. There are many shorts, who knows who has organized this media machine? Maybe Maverick will reassure their investor base that they are not short BBRY and that these rumours are false? Lee is one of the most admired investors in the world and would never be associated with this trade.
What Should Investors Do Here?
- You are getting a heavily discounted and manipulated stock at sub $15 that, without the shorts stepping on it, would be about $18 now. Lucky you.
- Understand that just because an article is posted online in a WSJ property like Barron's, it doesn't mean it's based on one iota of fact or truth, as so many financial and tech editors have proven to be lazy, or outright misleading.
- Protect yourself against the media. Think for yourself and question 'authority.'
Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am fed up with unfettered manipulation and market abuse