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InterOil. Daily Distortions no.21

October 23rd, 2008 · No Comments

We have to get back to a series we ran a couple of months ago. With InterOil talking to several potential partners, the people who are short on this double their efforts…

There is this character ‘Bostonkenmore’. He featured in the first 10 episodes of our series, purporting the most byzarre geological theories. He’s at it again. For starters, this is kind of weird as:

  • Covering Here  I think I’ve made a pretty good return on Interoil at this point. Though I still think the stock is a zero, I can’t risk losing my return because Interoil comes out with some lying press release. I’ll be back in mid November to talk about their financials which I’m sure all of the longs will think are fantastic because of the profit they will report. [Bostonkenmore]

Kind of curious. He covers, but keeps on bashing the stock yet he has no position in the company (he’s not the only basher with zero stated interest). What do we do, do as he does, or as he says?

In any case, he hangs around message boards all day, even without a position. Yahoo removed all his messages (you’ll find that of you click on the links in our first series on him). It is very hard to get someone’s messages removed, so he must have violated the rules pretty badly. No surprise there.

We confronted him with the fact that he covered, but still keeps bashing.

  • I covered because I think the risk outweighs the reward. [Bostonkenmore]
  • Perhaps because you can’t respond to the criticisms, you attack our personal integrity. Its disgusting. Its clear that anyone using Shareholders Unite to pick their stocks has lost a bundle and will likely continue to do so as STP promotes companies with very little cash flow. [Bostonkenmore]

Well:

  1. So at least he thinks the risk/reward situation is favourable to the longs. The first and last time we agree with him
  2. Look at his accusation that we can’t deal with his argument (we have 150+ post here as witnesses to the contrary), we attack his credibility. He then immediately does the same to us. And we promise you, this he does all the time. In any case, we find it curious why someone with no stake and a manifest lack of real conviction the company will go lower feels the need to bash it every day. But hey, that’s just us..

He used to flatly deny naked shorting even exist (unfortunately, these messages were wiped out, but he doesn’t deny it, as will become clear). We wrote a few kind lines about the deepcapture.com website that has uncovered much about naked shorting and a concrete article about Deutsche Bank selling naked short. Here is his response:

  • I think that using “Deep Capture” and “Excellent Journalism” in the same sentence should be outlawed. [Bostonkenmore]

Yes, you read that right. No arguments, just attacking the credibility of the author. There is a host of derogatory remarks (and links to articles doing the same) directed at Patick Byrne

  • If not for Mr. Byrne’s father, there would be no Overstock and hence no “deep capture”. [Bostonkenmore]

But he can’t be that stupid (he has a PhD and is a successful entrepreneur), and most importantly, most of that excellent journalism comes from Mark Mitchell, formerly of the Wall Street Journal. So to discredit excellent articles from Mitchell, they have a go at the guy (Byrne) who started the website where Mitchell writes, and not with arguments.

For instance, he got support from another guy, typically posting a nasty article about Byrne and the deepcapture site. Apart from a lot of name calling (yes, that again), that article’s only point was that Patrick Byrne tried to hide his involvement.

This really is a funny argument. Go to deepcapture.com and you’ll find Patrick Byrne all over the front page. Not really trying to hide any involvement, so it seems. Rather the exact opposite.

We also wrote that now even the SEC thinks naked shorting is a serious problem, that InterOil has large amounts of undelivered shares and has been on the failure to deliver list (that is, a list of companies of which shares have been sold, but not delivered, above a threshold, a sure sign of manipulation) for 540 consecutive trading days.

Also, according to that excellent buyins.net website, the latest figures (June 2008) for delivery failures in IOC shares was 6M (you have to be a member, but we got permission to publish these figures). Buyins get their figures directly from the SEC, by the way. How does he react. Not with arguments.

  • Buyins is just another scam website like deepcapture. The people who use naked shorting as an excuse to cover up fraudulent companies and suspect business models are the real criminals. The real problem is that investors get caught up in blaming short-sellers and naked shorting for the serious problems in the companies they are investing in. THAT’S where I have a real problem with what you are doing. [Bostonkenmore]

Why use arguments when it’s so much easier to just slam everyone who disagrees with you as a scam.. (and we’ll spare you the name calling he subjects us to). And, the last time we looked InterOil was doing well, another record flowing discovery well and a turn-around in the refinery plus a cleaned up balance sheet. Not bad. We’re not complaining, at least not about that.

As a parting shot, another comment from this guy:

  • As you know any premium on NG in one area over another is unsustainable outside the cost to transport the gas. IOC hasn’t proven any reserves and even by its own estimates won’t be producing anything until 2014. Chessapeake has 10 TCF of proven reserves which they are producing as we speak. [Bostonkenmore]

Indeed. And even CHK is down from the 60s to the teens! Interoil can’t be that bad an investment, then. In fact, as we argued before, all smaller energy plays are totally beaten up, especially small exploration companies without output and dependent on outside financing. No matter how much the bashers try to blame it on company specific matters, it isn’t.

We’ll leave you with another quote from Boston from another message board.

  • “Secondarily, why would anyone in their right mind go long with so much uncertainty in the world economies?” Because historically times of great uncertainty have been terrific times to buy. By the time the uncertainty clears up stocks will be much higher than they are now and the opportunity will be gone. [Bostonkenmore]

This might be the second time we have to agree.. 🙂

Tags: Daily Distortions