Doublebagger is on a roll today..

InterOil (IOC) recently announced that final bids are due on February 28th for the partial sell-down of the Elk/Antelope resource. If this was a normal situation, you would expect the stock price to gradually move up towards the expected bid value (well over $100/share) minus a risk discount. Instead, the short interest has climbed to an all-time high (11.4M shares) and the stock has drifted sideways to slightly down. Why is this? As the shorts repeatedly point out, the CEO Phil Mulacek has made numerous statements in the past regarding a pending sell-down and those dates came and went. As a result, Mulacek has lost all credibility with Wall Street and the shorts are counting on Phil to screw-up yet again. Curiously, this is the short thesis of three well-respected hedge funds I spoke with over the past two weeks.

It is always dangerous to say 'This time is different', but the facts support this conclusion. On July 2, 2012 InterOil announced that Gaylen Byker assumed the role of Chairman of the Board. Potential bidders wanted assurances that the bidding process would be run professionally and that the goal posts would not move (yet again). Word is that several bidders expressed specific concerns regarding Mulacek and his questionable credibility in regards to the bid process. InterOil desired to demonstrate its commitment to a professional process and was not going to let anyone (Mulacek) subvert the process. The Company responded by marginalizing Mulacek's power on the Board of Directors. From some reason, the shorts fail to embrace the significance of this.

[Read on here]