Sam Antar Blog | Thanks to Marc Cohodes, We’re Back to the Bad Old Days at Overstock.com | Talkmarkets
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Sam Antar is a convicted felon and a former CPA. As the CFO of Crazy Eddie, Mr. Antar helped mastermind one of the largest securities frauds uncovered during the 1980s.

Today, Sam Antar is a forensic accountant. His primary work focuses on identifying and investigating public companies ... more

Thanks to Marc Cohodes, We’re Back to the Bad Old Days at Overstock.com

Date: Wednesday, December 20, 2017 12:18 PM EST
  • Overstock.com (NASDAQ: OSTK) shares have soared in recent weeks, much of that due to hype concerning its t0 (tZERO) venture by CEO Patrick Byrne, and publicity generated by his chief advocate, former money manager Marc Cohodes, who has abruptly (and with scant explanation) reversed his formerly critical stance.
  • The hype-driven increase in the share price has overshadowed a longstanding negative factor in evaluating the company: the behavior, character and credibility of the CEO, who has a longstanding practice of accounting games, harassing critics and making untrue statements.
  • As he promotes his Overstock position, Cohodes has adopted some of Byrne’s most aggressive tactics. He has sought to intimidate and silence critics in private communications, and has waged an aggressive public campaign harassing skeptics on social media.
  • Without critical scrutiny by independent analysts and the financial press, investors are ill-served and the market is not sufficiently exposed to contrary points of view.


Marc Cohodes


Overstock.com CEO Patrick Byrne is good at many things, but not running a public company. The company has cooked the books for years at a time, and as explored by money manager Dave Kranzler in this Seeking Alpha blog, Overstock is a “dumpster fire waiting to happen,” a cash-burning vehicle run by a hype-happy chief executive and floating on a cloud of hot air.

But Byrne is very good at hype and suppressing negative coverage, and we’ve seen much of the former and little of the latter lately. Overstock shares have climbed. Dissenting voices exist only on social media. There is little press coverage of the company that is skeptical or probing, and puff pieces predominate. The CEO’s long-established record of deception and odd behavior has been disregarded, even distorted. One recent CNNMoney article rewrote history by turning Byrne’s infamous “Sith Lord” fantasy into a metaphor, and not the paranoid delusion, referring to an imaginary person, that it actually was.

Reporters and analysts who have covered Overstock in the past know that critical scrutiny exacts a price in the form of personal attacks, sometimes against one’s spouse and family. As has been chronicled over the years by myself and others, Byrne and his employees and surrogates have bullied, threatened and stalked analysts, the press, and even ordinary citizens who speak out against the company and his methods.

Overstock is still benefitting—and the market continues to lose out—from this campaign of intimidation.

Little if any attention is paid to the fact that Byrne’s credibility was shattered by a devastating 2016 libel verdict which excoriated Byrne and found that the truth "was of no consequence” to him and his minions. His Deep Capture smear site, which was the subject of the still-pending libel action, has never been repudiated, and is used from time to time to counteract the sparse negative press coverage. Most recently, as noted in my last blog, Deep Capture was deployed against a Daily Beast reporter, who was accused of going over to the “dark side” when he made queries for this article.

In an increasingly difficult journalism environment, news organs and journalists can be forgiven for not wanting to deal with that kind of harassment.

Byrne has never withdrawn any of his smears against the media, nor disavowed and apologized for the underhanded tactics that he has used against the media and his critics over the years. They included stalking journalists like Barry Rithotz and their families (including their minor children), on Facebook. My understanding is that Byrne very recently privately reaffirmed his pride in his previous behavior, even as he occasionally makes vague and also private expressions of regret to win over critics.

Marc Cohodes, a retired money manager, used to have no illusions about Byrne. His now-defunct hedge fund once was short the stock and was sued by the company. He said in a 2011 deposition that Byrne was “not fit to run a public company,” and in December 2013 he was telling me in an email, after Byrne was sued for consumer fraud in California, that “all he does is lie.” (Click on image to enlarge.)
 

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