If Cuban wanted real credibility, he'd announce his trades as soon as he made them instead of when the article is published two months after the fact. Considering that a major effect of these articles (the cynics among us would say 'planned effect') may be to drive down the stock price of the companies written about by ShareSleuth, and thus help Cuban's short positions, ShareSleuth could become a real service for all, not just for him, if Cuban's trades were revealed immediately.
The SEC was warned about Xethanol on April 7th, 2006 (great time to short it) as well as other ethanol related securities which may be scams (one too many stock promoters and/or PIPE deals).
Please feel free to contact the SEC for a copy of this "research" report which was published near the "top" of the ethanol cycle.
Mr. Weiss, I will be sending you a copy as I believe you will be most amused by it.
No very strong downdraft upon the other stock prominently mentioned in the Sharesleuth article, UTK. It was in the neighborhood of $16 on May 31, has been close to $24 in recent days, and has fallen only slightly since the publication, to $21.80.
I had zero position in the company till chris told me about it.
I tried to short it when he told me, but had to wait till i was able to borrow it, which was not immediately.
We are not examining my portfolio to pick targets, although there is 1 company that I am short , IIG, that i might propose to chris for consideration.
theissue with IIG is not the fact that im short the stock and have said so publicly already, but rather that its been written about so much already
Utek (UTK) has filed paperwork recently to sell common shares of Xethanol (XNL). Perhaps that explains why share price is where it is.
With respect to the "ethanol" got too frothy e-mails the SEC got in April of 2006, Xethanol was not the only security mentioned. Several others were mentioned as well including the stock promoters touting them and the reasons why they were being touted so hard which was/is:
"the hype ahead of the PIPE"
The fact Fusion Capital II was involved so early was/is a red flag. This firm specializes capitalizing unprofitable micro-cap securities.
Best wishes to all Xethanol short sellers.
FD: I do not have a position in Xethanol and did not participate in the Goldman Sachs' PIPE deal.
Thanks for sharing your thougths...I follow Cuban sometimes more from a film angle, and I recently started investigating his dealings w/ shareslueth, very interesting, eh?
--RC of strangeculture.blogspot.com
I can glimpse into the mind of a reporter and understand his thoughts on the ethics of trading stocks and journalism combined. Yet is it really unethical? Why isn't their more attention to business journalists who plug stocks when they have long positions? John Layfield from thestreet.com promoted Xethanol in articles while he was building a position. Think of all the investors that lose money by following this kind of uninformed, wishful thinking advice. I am one of those investors who lost money in Xethanol. Fortunately my losses were not huge. If this is combination of journalism and stock trading is so unethical why do we mostly hear ranting when it is short selling?
J.G. Philadelphia
Yes it really is unethical, and the fact that it takes place on the short side doesn't make it any less so. The "baloney brigade" wants the public to believe that journalists are lapdogs of short-sellers, and I sometimes think that short-sellers -- a few, at least -- want that to be so.
The public needs more tough financial journalism, but what Cuban is doing is not the answer because it isn't journalism.
Wouldn't you rather have seen the article on Xethanol appear in a magazine such as Barron's, and not in an Internet organ devoted to legal insider trading for the benefit of one billioniare? Does it serve your interests, as an investor, for financial journalism to be undermined?
I suppose we should agree that what Cuban is doing isn't really journalism. Yet I don't think that makes it bad. I would have much rather seen more in depth articles on Xethanol from magazines like Barrons, exploring the pros and cons. However when I was researching the company, little was published about it except a brief article in Fortune Small Business, and an interview transcript with WSJ. I could not find any analyst coverage either. The articles I found might as well been paid advertisements for Xethanol since they merely published it's propaganda.
Since we don't have an SEC with teeth, and the business media is generally more interested in the positive and exciting, even if they are pipe dream stories; then I am glad if it takes a billionaire to finance the unearthing of the truth, even if he stands to profit. I think of it as reward money such as person receives when they recover someone elses lost property. The SEC imposes fines when they spot wrong doing, the investors that lost seldom get any money. So if it takes profit to motivate the writing of the truth then so be it, all in investors can benefit from it.
So it is only unethical if it is passed off as true journalism. If we took away the word journalism to describe Sharesleuth.com's business model, then Cuban is not doing anything unethical as long as he prints what is true, wouldn't you agree?
This point is addressed in a good article by Ben Silverman today. See my item linking to that. http://garyweiss.blogspot.com/
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