You'll never believe who's dropping dimes to the feds!

Sam Antar, formerly the CFO of Crazy Eddie, known in the New York area for over-the-top commercials that scared the hell out of kids (well, me at least), knows his way around a questionable balance sheet. For 15 years, he was the executive chef of book-cooking, ultimately taking a guilty plea to conspiracy and obstruction of justice charges. He stayed out of the clink by taking the stand on the government's side at a 1993 trial, ultimately sending his cousin, Eddie Antar to prison for seven years or so.

Crooks make the best cops, so to speak, and Antar is putting his skills to work. He's out hunting for accounting fraud and sending his analyses off to the SEC. On his blog, the former CFO laid out what he called a "bulletproof case" against Overstock.com (NASDAQ: OSTK) - a company that the SEC had been investigating since 2006. The inquiry has been reopened.

Continue reading Crazy Eddie's crazy ex-CFO investigates Overstock

Crazy Eddie's crazy ex-CFO investigates Overstock originally appeared on BloggingStocks on Wed, 07 Oct 2009 09:30:00 EST. Please see our terms for use of feeds.

Continue reading Overstock reports GAAP profitability -- sort of

Overstock reports GAAP profitability -- sort of originally appeared on BloggingStocks on Mon, 02 Feb 2009 16:45:00 EST. Please see our terms for use of feeds.

Quarterly earnings calls are a great opportunity for investors to hear directly from the companies they've invested in and to get clarity from management when they answer questions posed by analysts. I listen to hundreds of calls every quarter, and I'm constantly surprised (and sometimes confused!) by the responses offered by management. This is the first in a series of occasional posts on some memorable quarterly earnings call moments.

Overstock.com (NASDAQ: OSTK). Chairman and CEO Patrick Byrne never ceases to . . . amaze me. While I sometimes come away from their quarterly call more perplexed than ever, Byrne's responses to questions certainly stand out. Here are some of the more memorable comments from their latest quarterly call, held on October 24, 2008.

While commenting on accounting errors that resulted in a financial restatement, Patrick Byrne explained it this way:

"We had been managing to a yardstick that turned out to have a bit of rubber in it at the end of the quarter."

Well, that certainly clarifies things!

Moving on to a conversation on EBITDA and Cap Ex, we hear that OSTK is:

". . . like the proverbial boa constrictor digesting a baby hippo. We ate the baby hippo about three years ago -- actually right now -- and it's moved its way through the boa constrictor."

Continue reading Caught on the earnings call: Overstock's CEO offers EBITDA without the 'A'

Caught on the earnings call: Overstock's CEO offers EBITDA without the 'A' originally appeared on BloggingStocks on Tue, 11 Nov 2008 15:20:00 EST. Please see our terms for use of feeds.

Overstock CEO Patrick Byrne takes a victory lap: not so fast originally appeared on BloggingStocks on Mon, 27 Oct 2008 13:31:00 EST. Please see our terms for use of feeds.

Overstock CEO: Stockpile food for the credit crunch! originally appeared on BloggingStocks on Fri, 12 Sep 2008 15:40:00 EST. Please see our terms for use of feeds.

Matt Schimler - Merrill Lynch: Also, what percentage then of your direct business is reselling returns?
Patrick Byrne: Got to be about a quarter of it. Isn't it Dave?
David Chidester: I don't think it's quite that high.
Byrne: What is our direct business showing up on a GAAP basis, David, as a percentage of sales?
Chidester: It's about 21%.

Does Patrick Byrne really follow Overstock? originally appeared on BloggingStocks on Mon, 21 Jul 2008 15:48:00 EST. Please see our terms for use of feeds.

Overstock.com plummets on earnings originally appeared on BloggingStocks on Fri, 18 Jul 2008 12:10:00 EST. Please see our terms for use of feeds.

In a recent interview with The Register, Overstock.com (NASDAQ: OSTK) CEO Patrick Byrne told (his side of) the story of Force Protection (NASDAQ: FRPT), a maker of armored vehicles for the military. To hear Byrne tell it, this is company that is keeping our troops safe but that, because of naked short selling, has been unable to raise the capital necessary to fill orders.

Force Protection was down more than 20% yesterday after the company again delayed the filing of its 10-K, citing the "scope of the work to be performed to complete its analysis and to identify the material weaknesses in the Company's internal control over financial reporting, including the need to restate its financial statements." Darn those naked short sellers! Why did they mess up the company's internal controls? Oh wait. They didn't. And in the middle of this mess, the CEO resigned earlier this year.

Meanwhile, Overstock.com, the crown princess of the naked short selling victims, announced that it actually lost four cents more in 2007 than previously reported as a result of changes in its revenue recognition based on "accounting comments from the staff of the SEC."

Continue reading Force Protection (FRPT): Sometimes the short sellers are right

Force Protection (FRPT): Sometimes the short sellers are right originally appeared on BloggingStocks on Tue, 18 Mar 2008 13:36:00 EST. Please see our terms for use of feeds.

According to an 8-K recently filed with the SEC, Overstock.com (NASDAQ: OSTK) CEO Patrick Byrne will be taking home what looks like a pretty small pay package: A bonus of $0 for his work in 2007, and a salary of $0 for 2008. He will receive a restricted stock grant of 15,000 shares, but that's pretty reasonable.

But at a cost of nothing, Patrick Byrne is still a very, very expensive CEO for the company's shareholders. His postings on message boards and stalking of the company's critics may be creating very serious liabilities for the company, and he and Overstock are currently the subject of an SEC investigation.

And that's to say nothing of the fact that, operationally, Overstock.com has been nothing short of an abject failure. The company has lost enormous sums of money since its inception. The company's sales growth has stopped, and as Sam Antar has written on his blog, Byrne has established a track record of failing to deliver on his projections.

So Byrne might seem like a bargain at $0 per year, but it's a bargain in the same way that buying lead-tainted toys for 50% off is. Your children's safety and the well-being of a public company are too important to cut corners. In the past couple months, Overstock has lost hundreds of millions of dollars in market value.

The cost of having Patrick Byrne as your CEO isn't $0 after all.

Overstock.com CEO Patrick Byrne overpaid at $0 originally appeared on BloggingStocks on Thu, 17 Jan 2008 09:50:00 EST. Please see our terms for use of feeds.

As Tracy Coenen discussed earlier, Overstock.com (NASDAQ: OSTK), co-founder, president and chief operating officer Jason Lindsey resigned and left the company's board of directors.

Lindsey had already retired once but came back, in CEO Patrick Byrne's own words, "when I screwed it up a couple years ago". Byrne added that "He's done a superb job. Now that it is back in a solid trailing twelve month cash-flow-positive position, he wishes to return to our previous arrangement. While Jason won't be as involved in the day-to-day operations of the company, he will still oversee special projects in a part-time capacity."

After Byrne's pat on the back and attaboys, the stock hit a new multi-year low in this morning's trading.

There are a few things to keep in mind here. As Gary Weiss wrote on his blog,

Lindsey says he is leaving because he is "ready to take a less active role in order to spend time on some outside ventures." Baloney. Note that he is leaving as director -- a position that surely requires no major heavy lifting in a board as supine as this one.

Sam Antar is also suspicious of the resignation that comes in the midst of an SEC investigation: "Was the SEC investigation of Overstock.com an undisclosed factor in Jason C. Lindsey's resignation?" Antar also discusses accounting questions surrounding Overstock.com, and comments from Mr. Lindsey on conference calls that raise questions about his involvement.

One thing's for sure: The market's reaction to Lindsey leaving doesn't suggest that traders buy Byrne's "everything is hunky dory" assertion that Lindsey left because he has restored the company to such great condition he is no longer needed in a full-time role.

Why did Overstock's president and COO really resign? originally appeared on BloggingStocks on Thu, 03 Jan 2008 14:45:00 EST. Please see our terms for use of feeds.

As Gary Weiss discussed on his blog, Overstock.com (NASDAQ: OSTK) CEO Patrick Byrne issued a press release last night to complain that his company was back on the REG SHO list, a list of stocks experiencing failures to deliver often indicative of naked short selling. Overstock had disappeared from the list for 6 days after 669 consecutive days on the list.

Byrne added that "Here we are on the eve of the third anniversary of Regulation SHO (January 3) and hundreds of companies continue to be manipulated -- right under the SEC's watchful eye."

Here's where it gets interesting. According to a countersuit against Overstock filed by Copper River:

When asked about the December 2003 short squeeze, Byrne replied, "when opportunities come along where we can knee the shorts in the groin, that's always good for fun and amusement."

What did Byrne mean by that? If Patrick Byrne engaged in perpetrating an artificial short squeeze to "knee the shorts in the groin", that would be manipulation!

Overstock.com CEO Patrick Byrne accuses others of manipulating his stock originally appeared on BloggingStocks on Fri, 28 Dec 2007 12:42:00 EST. Please see our terms for use of feeds.

Continue reading Overstock brags about customer service -- how about some profits?

Overstock brags about customer service -- how about some profits? originally appeared on BloggingStocks on Tue, 18 Dec 2007 11:11:00 EST. Please see our terms for use of feeds.

Overstock.com CEO Patrick Byrne continues diversionary tactics originally appeared on BloggingStocks on Fri, 14 Dec 2007 17:53:00 EST. Please see our terms for use of feeds.

Continue reading Overstock CEO Patrick Byrne embarrasses himself once again

Overstock CEO Patrick Byrne embarrasses himself once again originally appeared on BloggingStocks on Tue, 11 Dec 2007 12:05:00 EST. Please see our terms for use of feeds.

"Recently, video-taped comments I made in a school voucher debate setting were edited and posted online. Subsequently, some journalists erroneously claimed that I dismissed these statements as having been taken out of context. This assertion is false. In fact, my claim is far stronger: the clip is a lie, because it inverted what I actually said, which is far worse than simply being 'taken out of context'.

Not content to apologize for his comment about burning kids, Byrne is now burning Overstock's money to defend himself. Why is Byrne using shareholders' money to defend comments he made in a personal political crusade that has nothing to do with the company?

Overstock's CEO Patrick Byrne defends his dumb comments on the company dime originally appeared on BloggingStocks on Fri, 02 Nov 2007 17:35:00 EST. Please see our terms for use of feeds.

Dear Investor:

In Q3, we generated positive EBITDA for the first time in a non-Q4 quarter. I believe this validates our view that a profitable business model is emerging, particularly in light of our de minimus capital expenditures ($316K during Q3).

We also returned to positive (albeit modest) top-line growth despite halving our marketing expenses. A year ago, I said that we had a laundry list of projects we were working on to improve our marketing efforts. Since then, our marketing dollars have become twice as efficient. We are about one-third of the way through the list; I do not know what the remaining two-thirds will bring.

Expenses are drum tight, product selection is strong, operations are humming, and customer satisfaction is extraordinary. We are superbly positioned for the holiday season.

I look forward to our call, and as always, remain,

Your humble servant,

Patrick M. Byrne

Visit AOL Money & Finance for more earnings coverage

No apologies from Overstock's Patrick Byrne this quarter originally appeared on BloggingStocks on Fri, 19 Oct 2007 10:13:00 EST. Please see our terms for use of feeds.

Overstock.com (OSTK) puts shareholder dollars to good use: hiring lobbyist originally appeared on BloggingStocks on Mon, 17 Sep 2007 19:31:00 EST. Please see our terms for use of feeds.

While the shareholders and board of directors at at Whole Foods Market (NASDAQ: WFMI) wish CEO John Mackey would pipe down, and the board at Overstock.com (NASDAQ: OSTK), if it exists, seems indifferent to CEO Patrick Byrne's Regulation FD-flouting rants, Herb Greenberg has a nice WSJ column (subscription required) on executives who take a different approach. To borrow a line from Calvin Coolidge, these companies have decided that nothing they don't say will do them any harm.

The piece talks about a few thinly traded, closely held companies, several of which list their shares on the OTC markets, which tend to be highly illiquid and provide little exposure. These companies don't hold regular conference calls and don't present at investor conferences, but some have actually provided investors with very strong returns.

The highlight of the column is a company called Expeditors International (NASDAQ: EXPD), a transportation and logistics business. Expediters responds to shareholder inquires by filing 8-Ks with the SEC providing pithy, and often bitchy, responses to questions. The latest series is one of the strangest 8-Ks I have ever seen.

Continue reading The Calvin Coolidges of capitalism: Is quieter better?

The Calvin Coolidges of capitalism: Is quieter better? originally appeared on BloggingStocks on Sun, 22 Jul 2007 09:40:00 EST. Please see our terms for use of feeds.

Score one for sanity in financial markets.

In the midst of outcries about naked short selling from a group of conspiracy theorists deemed the "Bologna Brigade" by one of my favorite investigative journalists, Gary Weiss, the SEC has found no evidence of manipulative naked short selling of IPOs.

The agency studied 295 IPOs over 16 months and, according to the Wall Street Journal, didn't find evidence that traders engaged in naked short selling were the cause of fails to deliver. According the SEC, failures to deliver in IPOs "cannot be explained by short selling in general or 'naked' short selling specifically."

This could be bad news for the anti-naked short selling zealots led by the entertainingly insane Patrick Byrne, CEO of Overstock.com (NASDAQ: OSTK). They have long held fails to deliver as being the indicator of widespread naked short-selling but, according to the SEC, that isn't the case, in least in the case of recent IPOs.

The naked short selling issue looks like a red herring to me, tossed around by CEOs whose stocks are underperforming because management has established a track record of OPUD -- Over-promise, under-deliver. In the case of OSTK, the only fail-to-deliver investors need to worry about is Patrick Byrne's failure to deliver profits.

SEC finds no naked shorting problem in IPOs originally appeared on BloggingStocks on Tue, 24 Apr 2007 10:48:00 EST. Please see our terms for use of feeds.

The Smart Money Stock Screen [subscription] in today's Wall Street Journal gives a list of eight stocks that have "recently been the subject of unusally heavy short selling." The premise of buying heavily-shorted stocks is that if the shorts all cover at once, there will be a short squeeze, which Trade2Win defines as, "When the price of a share rises and investors who sold short rush to buy it to cover their short position and cut their losses. This, in turn, drives the stock price higher, which results in even more short sellers feeling compelled to cover their positions." Jim Cramer illustrated it on his show Mad Money by squeezing toothpaste out of a tube.

Is this a good way to make money? I doubt it. First of all, short-sellers do famously strong, in-depth research. They are famous for catching issues such as accounting fraud (like Enron), inventory problems, and business model deficencies long before Wall Street analysts catch on. Before you buy a heavily shorted stock, try to find out why people are so bearish on it. Believe it or not, stock message boards are often a good way to do this kind of research (Just don't buy or sell based on anything anyone says on a message board).

Rather than blindly buying stocks with high short interests, I think investors would do well to learn about the in-depth research methodologies employed by these investors referred to by Overstock's (NASDAQ: OSTK) Patrick Byrne as "sith lords." One of the most famous short sellers is Manuel Asensio, author of Sold Short: Uncovering Deception in the Markets. While some (like AsensioExposed.com) would say Asenio is unscrupulous, his down in the trenches research techniques discussed in this book can benefit the regimen of every investor.

Think you can beat the shorts? Don't bet on it originally appeared on BloggingStocks on Thu, 12 Apr 2007 11:55:00 EST. Please see our terms for use of feeds.