HOME
Message Board
CURRENT COLUMNS
- Editor's Corner
- Blogfest 2005
- Commentary
- Commentary Too
- Down The Middle
- Faulking Around
- Global Warning
- This guy walks into a bar...
- Investing 101
- Faulking Opinions
- Off The Rail
- Words
ARCHIVES
LINKS
CONTACT US
 | |||
Investing 101 - Aug 11, 2006 - Printable Version
- World’s Largest Plasma TV: Priceless…For everything else, there’s Sharesleuth.com
by Mark Faulk
Some days you just can’t buy a break. What started out as a great week for Mark Cuban suddenly turned decidedly south on Friday, or maybe we should say that it turned north. Turned north as in the first company that his own personal journalistic whore, Christopher Carey, profiled this past Monday on Sharesleuth.com. While shares of Xethanol (XNL-AMEX) have been falling steadily since shortly after Cuban began shorting the company on May 10, and the drop accelerated when his “journalistic newsletter” (winkwink) trashed the company this past Monday, the stock rallied on Friday, gaining over 10% for the day. At one point during the day, it traded as high $6.25 and was up over 22% on extremely high volume, before sellers and/or market makers managed to pull it back down to $5.63 on a few small trades at the end of the day. Then, today it was reported that Cuban has so far been unsuccessful in efforts to be the first person in America to buy the world’s largest plasma TV. One astute observer compared Cuban to the spoiled Veruca Salt character in Willy Wonka and the Chocolate Factory: “I want an oompa-loompa now, daddy.”
Cuban has courted controversy as an outspoken, irrational billionaire ever since he and his partner Todd Wagner sold Broadcast.com to Yahoo for $5.7 billion in 1999. He subsequently bought the Dallas Mavericks basketball team, was the brainchild behind a failed TV reality show called “The Benefactor” (for the 99.9% of Americans who don’t remember that little gem, it was basically a rip-off of The Apprentice, and lasted all of eight weeks), and once tried to start a hedge fund that would have bet on sporting events.
More recently, he was fined $200,000 by the NBA for screaming at referees and NBA commissioner David Stern after losing a playoff game two months ago “Fuck you! Fuck you! Your league is rigged!” Later on his blog, Cuban professed his love for cursing, when he said, in response to people who he said took offense at his cursing, “Fuck em.”
Trading stock before he releases negative reports on the company, trying to buy giant TVs before they go on sale, violating NBA regulations and using profanity to complain about losing a game…this is a person who clearly doesn’t feel that the rules that the rest of society have to abide by apply to him.
But this time, things might not be going his way. While he is still obviously money ahead on his short position in Xethanol, the backlash from “real journalists,” coupled with a press release from the company yesterday refuting the Sharesleuth piece, has triggered a comeback in the stock price. In an interview today, Xethanol spokesperson Beverly Jedynak said that “the company’s ultimate responsibility is to its shareholders,” and that Cuban’s actions raised the question of whether it will “enable every wealthy investor or any individual to trade ahead of released articles, and open the door to unfair advantages to those traders.” She questioned Cuban’s ethics, and added that she had never seen or heard of anyone “hiring an investment journalist simply to gain an edge on the market.“
In defending Sharesleuth.com, a website that writes negative articles about company, after Cuban has shorted the company’s stock. Cuban went on the offensive, saying that everyone wants to know “Was it good journalism? Was it responsible journalism? Then everyone wanted to know if what we were going to do was legal.Was it against SEC regulations? Was it ethical?”
And while he added a “link to the definition of journalism, just for fun,” in his latest blog, titled, ironically enough, ”Responsible Journalism,” he didn’t offer definitions for either responsible or ethical.
So, for Cuban’s benefit, here are the definitions for those two elusive words:
re·spon·si·ble (r-spns-bl) adj.
1. Liable to be required to give account, as of one's actions or of the discharge of a duty or trust.
2. Involving personal accountability or ability to act without guidance or superior authority: a responsible position within the firm.
3. Being a source or cause.
4. Able to make moral or rational decisions on one's own and therefore answerable for one's behavior.
5. Able to be trusted or depended upon; reliable.
6. Based on or characterized by good judgment or sound thinking: responsible journalism.
eth·i·cal (th-kl) adj.
1. Of, relating to, or dealing with ethics.
2. Being in accordance with the accepted principles of right and wrong that govern the conduct of a profession.
Cuban claimed that using information that he paid for, making bets on articles that aren’t released, is no different that selling advertising to support a newspaper. While Cuban has tried to tried to equate his paid shill to responsible journalists, others haven’t been so kind, with several newspapers questioning his integrity and his honesty. In an article by Loren Steffy in the Houston Chronicle, he said that “Cuban simply owns a Web site to flog his own investments. When announcing the venture, he used the headline ‘why journalism matters.’ If Sharesleuth is his answer, it's clear that what matters to Cuban has nothing to do with journalism.”
Others, including Dave Patch of investigatethesec.com, wonder if what Cuban is doing is even legal. Said Patch, “Didn't we have a BusinessWeek controversy recently where traders had bribed the printer to provide early editions of the news and then trade off that news before the articles came out? Isn't this basically the same thing? I don't think it is so much timing as trading off news that you know a story is pending and could aid your profits.”
In that article, thirteen people, including employees of Goldman Sachs and Merrill Lynch, were charged with trading on information obtained from the BusinessWeek articles before the publication came out, buying stock in companies that were mentioned favorably in upcoming articles. It was the fourth such case brought against people who obtained and traded ahead of the BussinessWeek column “Inside Wall Street.”
Mark Cuban just doesn’t get it. Like so many others who lack that all-important moral compass, phrases like “sound thinking,” “to give account of one’s actions,” “moral or rational decisions,” “able to be trusted,” and “in accordance with principles of right and wrong” are just meaningless words. He believes that he is a financial genius, yet his irrational antics have backfired on him time and again.
As Overstock CEO Patrick Byrne put it: "The more I read of his, the more I suspect he is a stunningly ordinary thinker. At the height of the Internet boom the guy got a wet-behind-the-ears Yahoo 'strategic' MBA (who was subsequently fired) to pay $5 billion for a $10 million business, and ever since he runs around thinking he is John Maynard Keynes."
It’s quite possible that Mr. Cuban will take offense at this article, and at others questioning his honesty and integrity. It wouldn’t be the first time he’s emailed me or others who question his right to play loose and fast with the rules, or who believe that the stock market (and professional sports, journalism, and even buying giant televisions) should be a fair and a level playing field for all participants, not one owned by spoiled, greedy, billionaires.
Fuck him.
Editor’s disclaimer: While we (unlike SOME people) have absolutely no positions in any of the companies that we report on, we do believe that Mark Cuban is an obnoxious asshole totally bereft of any morals or integrity whatsoever. While this is just our opinion, we believe that anyone who has ever heard Cuban speak for more than thirty seconds, or seen his antics during Dallas Mavericks basketball games will agree with us.
This article is also posted on Mark Faulk’s blog at The Sanity Check, along with an excellent comment section, at:
http://www.thesanitycheck.com/Blogs/MarkFaulksBlog/tabid/86/Default.aspx
Mark Faulk is the Editor of The Faulking Truth, and the author of the upcoming book entitled "The Naked Truth: Counterfeiting the American Dream," due out in September, 2006. For more information on the book and on the stock market scandal, go to http://www.faulkingtruth.com , and to pre-order your copy, go to http://www.theownersgroupinc.com/cart/
Add your name to our mailing list on our homepage, and we'll update you on developments in the Stockgate scandal.
To read more about the issue of stock counterfeiting, go to:
http://www.faulkingtruth.com/
http://www.investigatethesec.com/
http://www.thesanitycheck.com/
http://www.financialwire.net
http://www.americaneedstoknow.com/
Voice your opinion on our message board (you don't have to sign up to post).