With much sturm und drang and bluster, Overstock.com's (NASDAQ:OSTK) beleaguered CEO, Patrick Byrne, put his Deep Capture website back online last week. But he made an interesting, though understandable, omission: it doesn't contain any of the articles about which he is the subject of a libel suit in Canada.
Since that is pretty much what the plaintiff, Altaf Nazerali wants, it is a kind of preemptive capitulation. He omitted that little fact amidst all the bluster.
However, bears in this stock should take heart. Self-preservation always plays second fiddle to the ego of the mercurial Overstock CEO, whose stock continues to hug the vicinity of its 52-week lows as if they are an old and cherished friend.
Overstock and its shares continue to be burdened by its CEO's erratic behavior, and I have every confidence that bears in the stock will continue to be happy in the near-term future. Byrne, I suspect, is on the verge of a major Hubris Attack.
So far, Byrne has confirmed the suspicions I voiced last week: that, at the behest of his lawyers, he is holding back from putting online the outlandish charges that he made against Nazerali. The latter is a Vancouver stock promoter whom he smeared as an "Al Qaeda" agent in a multi-part, loony diatribe by his hireling, the disgraced former Columbia Journalism Review online editor Mark Mitchell.
In response to a reader's question asking the whereabouts of the Mitchell articles on Nazerali, which were conspicuously absent from the Deep Capture site, he responded:
They are coming back up, one at a time, starting in a few days. We will be re-publishing them at a rate of one per 2 days. Even if you read them the first time, you should read them again as we re-serialize them.
Note that he made no effort to justify his lie that the site was undergoing some kind of "routine maintenance." His pathetic fan club--consisting of burned investors seeking scapegoats for their stupidity--aren't particular about that kind of thing.
This is actually a remarkable thing for someone in his position to say. And, as I will explain shortly, it is terrific news for bears in the stock. Just so you don't think I've imagined it, I've inserted a screen capture below:
click to enlarge
Much as I admire Byrne for his ability to depress Overstock's share price, I find it hard to believe that he would do what he is threatening while the judge is considering an important pending motion. Such an action would be incredibly stupid, as it would hurt his chances of getting the libel suit tossed on jurisdictional grounds.
That was just icing on the cake. In his latest post, Byrne huffs and puffs and generally exhibits a great deal of malice toward Nazerali. I tell you, he is really a dream libel defendant if you're a plaintiff. One of his most interesting comments, and an indication of his self-delusion, is as follows:
. . . one key difference [between Canadian and U.S. libel law] is what is meant by "defamatory." It is true that the Canadian court noted that Deep Capture's reporting regarding Mr. Nazerali was "defamatory." But, importantly, this does not mean that it was not true or that it was not fair reporting. It does not mean that such statements may not be published. And it does not mean that Mr. Nazerali is entitled to any damages. Rather, it simply means that the statements regarding Mr. Nazerali tended to harm his reputation.
What Byrne disregards is that wherever this suit is heard, in the U.S. or Canada, he and Mitchell are going to have to substantiate the truth of his claims linking Nazerali to Al Qaeda.
Since Mitchell basically made up the Qaeda link out of thin air -- in keeping with his modus operandi, as I've pointed out previously -- the only real question any court will have to decide is how severely to punish Byrne, Mitchell, and whatever other Byrne minions are swept up in the suit.
Meanwhile, the issue of jurisdiction will have to be decided, to decide whether Byrne and Mitchell are tried in the fire (Canada) or the frying pan (a U.S. court). The question is, will Byrne prejudice his own case by republishing the articles, as he has threatened? Does he have the guts to take that step?
Now, since Byrne reads these articles, I have every confidence that he will respond to this challenge by showing what a big, bad hombre he is by "re-syndicating" those articles pronto, pending Canadian ruling or no pending Canadian ruling.
In other words, expect another major Hubris Attack to come wafting out of Salt Lake City any day now.
That's why I've said many times that in any company that had a scintilla of corporate governance, Patrick Byrne would have been history a long time ago. Since he isn't, Overstock shareholders (and that includes you, Mr. Chou) had better get used to those 52-week lows.
Unless, of course, Byrne decides to shed his Overstock hobby and devote himself to smear campaigns and conspiracy theories full-time. If that happens, Overstock shares will soar.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.