Anti-naked short selling conspiracy theorists receive a boost when Overstock.com (NASDAQ: OSTK) announced that the SEC had closed its formal investigation of the company without recommending any enforcement action.
In a familiarly self-congratulatory press release, CEO Patrick Byrne opined that "I believe that this inquiry was initiated, and persisted, because of false allegations made by a cohesive group of short sellers and a few financial journalists who dutifully serve them. In this case, I believe these folks fomented the SEC investigation against Overstock.com then tried to claim that the existence of an SEC investigation was evidence of wrong doing. We knew that was false."
But who cares what the SEC thinks about Overstock! Remember, this is the same agency that signed off on Enron's perversion of mark-to-market accounting. Instead, let's look at what Patrick Byrne said in 2004, as recently noted by Tracy Coenen: "Well, first of all, I'm all about GAAP. I have been so critical of the companies that do -- I don't believe in one-time charges; I don't believe in EBITDA. If somebody talks EBITDA, put your hand on your wallet; they're a crook."
Overstock's latest earnings release contains the word EBITDA seven times. So regardless of what the SEC thinks, Patrick Byrne considers himself a crook.
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Reader Comments (Page 1 of 1)
6-08-2008 @ 1:12PM
al coholic said...
I'm not sure what to think about this whole deal.
I used to read Gary Weiss' collumn but tired of hearing the same old rant about Overstock and Byrne as though it were the only business story in the world. He may be right about Overstock but his blog sure reads like a personal vendetta rather than any journalistic piece.
Now the SEC has closed it's investigation without any action? Are they in on the conspiracy too?
Zac, I don't know too much about this but I do know that you are smart enough to know what Byrne meant when said what he did about EBITDA, and your conclusion that he is a crook based on the fact that Overstock used the anachronism in their financial earnings release is ridiculous. Every single publicly traded company uses EBITDA on a regular basis.
This guy may be poison for all I know, but if you're going to call him a crook(which is essentially what you did) you'd better have more evidence than that.
6-08-2008 @ 1:18PM
Zac said...
Hi,
I'm afraid I don't understand -- he said people who talk about EBITDA are crooks, he talks about EBITDA, but somehow that's completely different from what he meant?
I just don't get it. And FYI, not all companies talk about EBITDA in their earnings releases. Many don't -- and the ones that don't tend to be the ones that are reporting GAAP income.
Zac
6-08-2008 @ 6:35PM
Unknown said...
Zac, If I am not mistaken, this is the same SEC that signed off on Gradient and the same SEC that ignored enforcement against several well connected hedge funds. Funny you never addressed thoem with such anger. care to tell us all why this one, amongst all others, disturbs you such?
Just out of curiousity, what makes you an expert in anything anyway? Is it because Tracy Coenen, Sam Antar, and Gary Weiss made these unfounded allegations (while on the payroll) that upset you? Sam is a convicted felon, Gary Weiss was recently banned from Wikipedia for being a sockpuppet, and Tracy is just a follower.