Countrywide Financial Corp. (CFC)
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- Forensic Analysis of Lehman Problems [view article]
- Hedge Fund Tracking: Blue Ridge Capital (John Griffin) [view article]
- Housing Bubble and House Prices Tracker [view article]
- Another Leg Down for Financials Is Coming [view article]
- Corporate Fraud + Government Intervention = Bailout Nation [view article]
- Countrywide: Dogs Howling Over Bare Bones [view article]
- Is Countrywide Financial Headed for Bankruptcy? [view article]
- On Short-Sellers and Dishonest Executives [view article]
- Wachovia: Waiting for a New Entry Point [view article]
- Wachovia Halts Wholesale Mortgages; Bank of America Won't Guarantee Countryside Debt [view article]
- What Conference Calls Tell Us About Mortgage Trends [Housing Tracker] [view article]
- Countrywide: Fine Line Between Ignorance and Corruption [view article]
loading ...Recent CFC Articles
- Forensic Analysis of Lehman Problems
- Hedge Fund Tracking: Blue Ridge Capital (John Griffin)
- Another Leg Down for Financials Is Coming
- Is Countrywide Financial Headed for Bankruptcy?
- Countrywide: Dogs Howling Over Bare Bones
- Corporate Fraud + Government Intervention = Bailout Nation
- On Short-Sellers and Dishonest Executives
- Wachovia: Waiting for a New Entry Point
- Wachovia Halts Wholesale Mortgages; Bank of America Won't Guarantee Countryside Debt
- What Conference Calls Tell Us About Mortgage Trends [Housing Tracker]
- Full List of Articles »
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On Short-Sellers and Dishonest Executives [view article]
Excellent article, and it points to a comment I posted some time back about CC: If you had gone short in November 2007, you'd have made a bundle. The company was trading at $11/share then, and it's now at about $2.10. ReplyOn Short-Sellers and Dishonest Executives [view article]
This is a repeated comment from your article "Short Selling Revisited"Good article. I like to "short against the box" in volatile markets for downside protection of long-term capital gains (and sometimes profit). Since I am shorting companies I already own, this is a good example of shorting that does not have the objective of "bringing down the company". In many cases, shorting against the box is a much more cost effective way to hedge than buying put options. The more volatile a stock, the larger the time value in the premium. Writing calls as a hedge provides limited protection, whereas, whereas selling short provides unlimited value protection. Finally, selling short has no expiration date. Reply
On Short-Sellers and Dishonest Executives [view article]
Markham enjoyed the post and I understand your attempt at short selling vs. dishonest management.I too think naked short selling is terrible and I worked a market where actually added to liquidity, however, I also seen naked shorting destroy companies. You have proven short sellers like Rocker funds who's research and clout with other shorts-hedge funds in the market team up on those stocks putting pressure that normally wouldn't exist because most people could get a locate to short a extremely "tight" stock.
I agree with glassbox the average investor doesn't know that their shares are being used in some cases against that. Of course you can always move those to cash and the brokerage cannot borrow them but in most cases those brokerages make a lot of money borrowing shares of those clients so it doesn't matter anyways.
Typically Prime brokers make large amounts on those "tight stocks" it is a daily rate that's computed internally on how hard they are to locate. I can tell you this, that revenue in this current environment is sorely needed.
lobster Reply
On Short-Sellers and Dishonest Executives [view article]
Even legitimate short selling is skewed - simply by creating two owners for every shorted share dilutes all shares temporarily creating downward pressure on the value. The benefit of "liquidity" is pretty weak justification. IMO "liquidity" is far better served by a strong cashflow statement rather than arbitrary rules that only serve market makers. Disclosure: exiting the stock market and putting all of my money into my own businesses. ReplyOn Short-Sellers and Dishonest Executives [view article]
I think its a given that naked short selling is a menace, as much as lying executives are a menace. The better argument and debate to have is which is the greater menace - lying executives or short selling in general. Until short selling is addressed, its pointless arguing the demerits of naked short selling (and trying to compare all other market menace to it) and the merits of short selling. ReplyOn Short-Sellers and Dishonest Executives [view article]
If the naked shorts are indeed using rumors and other illegal means to take down a company, then the root crime is market manipulation. Market manipulation in the form of lying executives, suspect accounting, etc, is no different from spreading lies to "take down a stock" (if indeed short-sellers are doing this). So people against the naked shorts should be against ALL market manipulators, instead of ignoring the ones that can cause stocks to go up.Make sense?
The other issue is that lying executives know their companies are in trouble when they say things like: "We'll be profitable next quarter, don't need more capital, no more write downs, etc", while legal shorts are shorting companies that investors are dumping due to the companies being in trouble.
So who is the real menace?
-M Reply
On Short-Sellers and Dishonest Executives [view article]
Markham, short selling and lying executives are 2 mutually exclusive events. I don't really understand why you are linking them both in your arguments as a point that those against short selling are so called 'ignoring the bigger threat.Reply
On Short-Sellers and Dishonest Executives [view article]
Short selling is like you borrowing someone else's gun and turning around to shoot the guy who lent you. You will return it only if the fella is dead or handicapped. Tell me, which shareholder will lend you shares to short a stock knowingly if he knows that by doing so, you are driving the stock price downwards? If he is not selling what he has, its his perogative - he wants to take the risk of holding through the tough time and he will have his reasons of bearing with 'lying executives' as the author puts it. What right and what position would a 'short seller' who is an outsider to this relationship between the shareholder and the management have to justify his action of borrowing the stock only to have it sold?The problem with all who justify the merits of short seller (including this author) is that not a single one has said anything about fair disclosure on who is lending and who is borrowing. Also, nothing has been addressed on how the cost of borrowing is determined which reflects the full market value of borrowing shares. When these 2 issues are fully addressed, can I say truly that short selling is fine. Under the current system, short selling is just so skewed to the advantage of the shorter that the longs have been taken for a ride and many don't even know it. Reply
On Short-Sellers and Dishonest Executives [view article]
Obviously, insiders have a piece of the business that they could sell if they chose to, and will react negatively to anything that hurts that as a way to raise money. So they'll gripe about the shorts, and not about anything that creates artificial demand.I'm an investor. Any irrational move threatens me (I can pick my opportunities, but that runaway truck could come through anywhere). If a company mends its evil ways and seems poised for a turnaround, a determined bear raid can drive it out of business. That's as bad for me as a rockstar CEO producing an unjustified run-up, and a good deal harder to anticipate.
So? Well I'd sure like to have the uptick rule back. And on the other side I'd like to see legal margin requirements (and related capital requirements) used to push back on buying stampedes. Reply
On Short-Sellers and Dishonest Executives [view article]
Naked short sellers are counterfeiting stock.LOOK AT GARY WEISE latest article “Naked Short Selling Stunt: 'Swatting an Imaginary Fly'” Note how they no longer allow comments on that crap poster. He should not even be on the shorting ideas list. He has bashed the Overstock CEO implying that he was crazy off balance and was shooting at fairy tales. This guy is working feverishly trying to first say that Naked shorting does not exist and then saying that it is only a insignificant problem. He is a propaganda artist for the Hedge funds.
Now a new book is coming out on Bears and the naked shorting. The HUGE rally in financials resulted with ONLY explanation being the FED disallowed naked short selling. They did not even take away the MM exemption yet some financials rallied 40% in one week!!
Watch who and what organizations try to discredit the idea of naked short selling. Ask your selves who do they really work for.
Look at CALM it has 125% of its shares shorted. Who you gonna belive Gary or your lying eyes.
Reply
On Short-Sellers and Dishonest Executives [view article]
Short selling is good it creates liquidity it can even lessen losses for naive traders on the other side of the transactions (lower highs and higher lows). That said naked shorting and the short and distort and the I will short you to zero crowd are destroyers not creators and should be stomped on like the cockroaches they are. ReplyOn Short-Sellers and Dishonest Executives [view article]
Excellent arguments here and reminds me of Asensio.com. This website has been exposing companies for many years with legitimate facts and research that saved investors a fortune if they had an open mind vs. criticizing the website despite the incredible accuracy over a long time period. ReplyOn Short-Sellers and Dishonest Executives [view article]
Excellent arguments about short selling and prime example is Asensio.com. That entity has been exposing companies for many years now and has saved investors a fortune if they had an open ear to the research. ReplyOn Short-Sellers and Dishonest Executives [view article]
Tan and Jason,First I'd like to thank you for reading my article.
Second, I'd like to point out that in no part of my article did I say anything positive about naked short-selling, or claim that I was in favor of it. In fact I clearly said that anyone in favor of fair markets should be against ALL ILLEGAL and/or UNETHICAL behavior, whether that includes naked shorts, false rumors or executives who blatantly lie about the state of their companies.
The article is more about people who rail against all short-sellers, while ignoring bigger threats from lying executives then it is about naked short-sellers. It was also about the fact that there is nothing inherently wrong with legal short-selling.
When having these discussions it's important to differentiate between naked short-selling and legal short-selling, as they're not one and the same.
-M Reply
On Short-Sellers and Dishonest Executives [view article]
I concur with the comments. Shorting is fine, and necessary for a properly functioning market. Naked shorted is not fine, and should be banned in all circumstances. Reply