Some necessary inoculation. There are a couple of hedge funds with 10M+ shares short, roughly half the float. This situation produces very large incentives to distort information, and we’re putting it politely. We’ve already given 19 examples of this in previous episodes, even offered the perpetrators a page here to answer our accusations, they declined..
Daily Distortions no.20. This series wouldn’t be complete without at least mentioning once “hopscotch”, a prolific 24/7 full-time poster (on several boards) who rises with a new identity after Yahoo removes all his previous post (which they do with considerable frequency, why would they do that?).
He publicly stated that he has no interest in IOC, so what would motivate someone to outpost anyone for years. He must be both rich (as his posting frequency gives no time for any job) and mad.
Or a paid basher.
What is bashing?
In a way bashing is relatively easy. It doesn’t have to convince anybody of anything, it doesn’t have to present any facts, it doesn’t have to convince anybody of an alternative investment thesis, just plant enough doubt for people not to invest.
The amount of doubt necessary is often very small, there are tens, if not hundreds of thousands of other stocks (let alone other financial instruments) to invest, the slightest unease usually does the trick. We have featured another person in this series who used arguments like: “Boone Pickens (holder of 3M IOC shares) might not have done his research, it’s only a small position for him.” It’s very unlikely of course, but hey, who knows..
Disinterested 24/7 poster without any stake in IOC, or something more sinister?
- Yahoo removes his messages with considerable frequency so he changes identities quite often (snakeboots53/banjo_bobby/procyon_loterman/moon_agate/knobbykneesus/foppy something, to name a few). This link also provides an earlier analysis of his trademark posting
- He post 24/7, even on weekends, with near insane frequency
- His messages are invariably short, to maximize the amount of posting, a tell-tale sign of a paid basher, no time for long-analysis
- Yet with 24/7 posting and multiple identities, he has no shares, he claims
- Nor options or warrants
All this 24/7 posting for years, changing identities after Yahoo removes all his post, and no stake?? It’s beyond belief.
His arguments and links to easy refutation:
1) IOC has no reserves.
- They got the top two top flowing wells of the Southern hemisphere, just to give you an idea, let them flow for a week and you have 1.5Bcf of gas, to put that in perspective, that’s equivalent to 250.000 barrels of oil. Let the run for a month and you have the equivalence of a million barrels of oil, not even counting the gas liquids
- A third party company assessing their reserves, it would take two months after the completion of Elk4 as was mentioned on an institutional investor day
- How reserves are categorized
2) The NYT article (Jan 2007)
- It really is incredible how many times he invokes that article. It must be hundreds of times, and it’s not that the article is very significant (very few facts and quite a bit of innuendo), it just shows they do not have a whole lot more. It’s a prime exhibit of an article purposely written to create doubt, which, as we have stated above, is not very hard to do. If you think serious media can’t be abused for these kind of purpose, think again. And read the last part of this link.
- Here a detailed discussion of that NYT article by a freelance journalist
3) “Stranded gas”
- It’s the last line of defence, now it’s very likely there is a lot of gas, enough for at least a single train LNG facility (resource estimates are now between 10-15Tcf, more than enough), but that hasn’t been built yet
- Stranded gas
- Stranded gas II
4) Critical questions
- In principle, these are good, any investor should ask critical questions and continuously reassess their investment positions. The purpose here, of course, is a different one. Just to create that tiny bit of doubt..
- We answered his questions before
- The amount of clutter he posts on the board is amazing. It serves the purpose to burry the good posts.
Luckily, most people do not get their investment information from a message board, but these boards (especially the Yahoo one, almost their only source of advantage left) is very well visited and there is a reason why these tactics are employed. If they didn’t work, they wouldn’t be.