We witnessed nothing less than a full blown orchestrated boiler room attack (complete with undercover ‘interviews’, bashing and rigging the rating systems of message boards, reports from convicted felons and even a Youtube video) on our main featured stock today, however amateurish it was executed. But this was more than a little revealing..
- For those that questioned our efforts to expose these people as unnecessary (in our ‘Daily Distortions‘ series), it must have been some wake-up call. We have always argued there are criminals on the short side. Naked shorting, as was common and massive (6M in June08, 1/3 of the float..) practice in this stock until that became much harder recently, was the most telling indicator, a paid basher and some very questionable newspaper articles other signs, but few can doubt after today.
- The ‘undercover’ Wayne Andrews interview, far from incriminating him, is actually a testimony of his integrity, and it is an excellent interview which contains many valuable pieces of information..
- For instance, we know there is oil, and that porosity is not the problem, so there is a lot of it. We also know now that in the first side track, it didn’t flow very well, so permeability could be a problem
- However, the relevant question now is whether that was due to pollution by drilling left-overs and fluids, an issue that will be revealed in the second side-track
- Even if permeability does not improve sufficiently in the clean second track, the relevant question then becomes whether, given the apparently excellent porosity, the rock can’t be made to flow with treatment. We think we could very well have answers as soon as early next week. Could it be just a coincidence that the shorts panicked today?
We cannot help but notice a few other ‘coincidences:’
- Is it a coincidence that Minkow is starting to “investigate” IOC and his buddies show up here, just when the shorts are really suffering (paying up to 40% interest and losing big time on their position) and (possible very good) news from InterOil coming shortly?
- Is it a coincidence that this exactly coincide with people rigging the message rating system on Yahoo, turning it upside down?
- Is it a coincidence that “fraud investigators” short the stock they “investigate?”
- Is it a coincidence that “fraud investigators” turn up on message boards of stocks they “investigate?”
- Is it a coincidence that “fraud investigations” get paid by hedgefunds?
- Is it a coincidence that the same people are all over the Overstock board and write “reports” on it only after it’s CEO has started a campaign against naked shorting?
- Is it a coincidence that all these reports they write invariably having no legal consequences (apart from one of the authors being sued for nakedly shorting and it’s deposition under oath revealing much of these coincidences..)
- Is it a coincidence this orchestrated attack occurs on option expiration day?
And last but certainly not least, the only “argument” of these shorts are terribly weak and circular:
- InterOil does not have reserves and therefore their LNG facility will not be built
The funny thing is, they do have at least 3.4Tcf of gas in the ground which is:
- Enough to start building the LNG facility (see the Wayne Andrews interview)
- That it’s not called reserves is only because that facility is not yet there, that is, they don’t have a way to produce the gas (see here for an thorough explanation of this point)