Lululemon underscores the strength of short sellers' research

Short sellers operate based on a methodology of "verify, verify, verify." It's why, in spite of the bad publicity they receive, they've been among the first to spot trouble at companies like Enron and Novastar (NYSE: NFI). Wall Street analysts have generally been the last to spot fraud and predict of collapse.

Sam Antar, white collar criminal turned fraud fighter, offers this advice to Wall Street analysts on his blog: "Do not trust, just verify. Verify, verify, and verify."

The short seller did it, and the cheerleaders didn't. Lululemon's short seller is 8% richer today -- more if he used options -- and all the longs can do is whine about those greedy shorts.

By the way, Peter Cohan is quite the shenanigans buster himself -- calling Novastar a short back in December when it was trading around $120 (it's now at $4.50). Here's one example of some of the thanks Cohan got for his prescience (from the comments section of that post and follow-ups): "Do you always make up lies about companies so that people will short the stock or sell their holdings in fear?"

Other commenters questioned Mr. Cohan's ethics and motives -- something his colleagues at BloggingStocks certainly don't appreciate.

No one came back to apologize to Mr. Cohan, but that's part of life exposing shenanigans: Ridiculed and defamed and then met with silence when you turn out to be right.

[Editor update: Thank you all for pointing the tense error in the post, it has been corrected]