Whole Foods Alias

I am loving the Whole Foods debacle. The CEO kept a yahoo finance message board alias for seven years, and used it to promote himself, Whole Foods, and occasionally attack his competitor, Wild Oats Markets. Message Board posters are constantly accusing each other of being “paid pumpers” or “paid bashers” or secretly working for a competitor. 99.99% of the time, these conspiracy theories are completely ridiculous. But now, thanks to Whole Foods CEO John Mackey, we can expect message board conspiracy theories to live on for quite a while.

iPhone is Selling!

I own Apple both in my personal portfolio, and the portfolio I manage. But I definitely had my doubts as to how many people would actually want to spend $499 to buy a phone. And I’ve wondered if Apple stock will take a break now that we’ve finally reached the release date.

Well, a friend of mine went to the Apple store today to get her computer fixed, and said it was mobbed like a rock concert. Four hour lines to sign up for iPhone service. Will be interesting to follow Apple stock this quarter.

OMR: Buried Treasure

Finding buried treasure in stocks that find, well, buried treasure

In March a friend humorously pointed me to Admiralty Holding Company (ADMH), a sad little penny stock for a company that searches for buried treasure on sunken ships. It sounded like a ridiculous investment. So I was surprised last week when a similar company, Odyssey Marine Exploration (OMR), rocketed up 80% to $7.38 when it discovered buried treasure.

Odyssey Marine Exploration claims to have discovered a Colonial period shipwreck with over 500,000 silver coins weighing more than 17 tons, hundreds of gold coins, worked gold, and other artifacts located in an undisclosed location somewhere in the Atlantic. The claims appear to have some legitimacy, as the Spanish Government is already suing Odyssey, claiming the treasure must belong to the Spanish crown. Presumably, the Spanish will allow Odyssey to keep some of the booty in exchange for their troubles. OMR shares closed down 20 cents, or 3% on news of the Spanish lawsuit today.

Jimmy Wales Interviewed on WallStrip Today

WallStrip has a nice interview with Jimmy Wales today, and Howard Lindzon promises to release a longer version of the interview this weekend (note: those of you reading this blog in certain aggregators/feeds may not be able to see the video below).

I had no idea Wales used to be a derivatives trader:

On Monday ValueWiki blogged that Wallstrip was being acquired by CBS for $5 million. I asked Howard for comfirmation and he did briefly respond to say “no comment.”

Apple Hacked – Prankster Sparks Selloff

Thousands of Apple employees received a phony email today announcing the iPhone would be delayed through October, and Leopard would be delayed through January. Engadget scooped the story at 11:49am, and by noon, Apple stock crashed $4.

Apple quickly responded to the error, and Engadget has published the original email and its retraction.

SOURCE: Engadget

Original Apple email

From: Bullet News
Date: May 16, 2007 9:09 AM CDT
To: [redacted]
Subject: Mac OS X Leopard and iPhone Delayed

Mac OS X Leopard Delayed Until January
iPhone Delayed Until October

REGIONS: Asia-Pacific, Canada, Europe, Japan, Latin America, United States
GROUPS: AppleCare, Retail

Apple issued a press release today announcing that iPhone which was scheduled to ship in June, has been moved to October and the release date for Mac OS X Leopard has been moved to January next year. A beta version of Mac OS X Leopard will be given to developers at the Worldwide Developers Conference (WWDC).

Apple email retraction

From: [redacted]
Date: May 16, 2007 10:47 AM CDT
To: [redacted]
Subject: NEWS: Disregard Bullet*News Sent May 16 at Approximately 9 a.m. Central–AP/CA/EU/JP/LA/US

You may have received what appeared to be a Bullet*News from Apple. This communication is fake and did not come from Apple.

The Power of Blogs

Message Boards are in a frenzy, calling for Engadget’s head. But it seems quite clear Engadget did nothing wrong, and retracted the story as soon as Apple issued a correction to its employees. The real story here is in the power of blogs. A single post from Engadget can rock Apple stock, and prompt a sell-off of millions of shares within minutes. This is a power the MSM, with its traditional news cycle, simply does not have.

Is WallStrip Being Acquired by CBS for $5 Million?

Jossip.com is reporting this story, which was soon echoed by TechCrunch. The trouble is, Fred Wilson of Union Square Ventures claims he didn’t broker the deal, and didn’t invest $500,000 in the company either.

Jossip claims the $5,000,000 deal is mainly to acquire the talents of WallStrip host Lindsay Campbell. Campbell is an aspiring actress who is scheduled to appear on the Sopranos.

Despite Fred Wilson’s public denials and corrections, James Altrucher, who recently sold StockPickr to TheStreet.com, seems to think the story is genuine. Jossip claims the story will be broken early this week, possibly Monday. I’ll put in an email to Howard Lindzon.

In the meantime, you can watch Fred Wilson on WallStrip to read his body language for subliminal clues. He does call WallStrip the “next big thing!”

Update 8:30am Monday: Howard says…”No comment.”

Microsoft and Yahoo…a No-Brainer?

Here is ShoeMoney’s post from December, 2006 10 Reasons Why Microsoft Will Acquire Yahoo in 2007. Reading through his reasons, this deal does seem like a no brainer. Microsoft has missed the boat on internet advertising so many times, in so many ways. Whereas the Yahoo Publisher Network gets top praise for the industry.

I’m Going to Miss Yahoo

It weird to think I’ve had my Yahoo email account for a decade. It’s also weird to realize how assiduously I have avoided ever using a Microsoft product. Perhaps this is terribly immature or anachronistic, but I still harbor resentment for the Microsoft brand for all the shady business ethics of the 80’s and 90’s. If Yahoo becomes a branch of the Evil Empire, I wonder if I will feel compelled to finally make Netvibes or iGoogle my homepage, transfer all my email over to Gmail, and move my Flickr account. Seems like a lot of work.

On a seperate note, Google seems to be taking the place of Microsoft in aggressively competing with every small startup on the web. Whether it’s YourMinis or Zoho, it seems Google’s army of engineers will find a way to outfund and outdevelop independent entrepreneurs. My friends at Google tell me their policy is to hire any and all talented developers regardless of job openings, simply to take them off the marketplace and bring them in house.

Google is no longer the perceived underdog to Microsoft, or to anyone really. Will be interesting to see how they maintain their positive public image while building internet hegemony. Will Google remember to “Don’t be Evil?”

Paid Analysts Missing the Mark

GigaOM has the scoop on how poorly Wall Street Analysts predicted last week’s earnings announcements. Analysts missed Amazon’s profits by a whopping 69%, and Apple blew away forecasts by 35%. Taking the leading internet companies, Wall Street lowballed earnings by 9%, both this quarter and last.

Analysts – What are They Good For?

There was once a time when analysts were privy to far more information than the average investor. Analysts get flown to the companies they cover, take quarterly tours of the company headquarters, and have lunch with the top company brass. Keeping such close tabs on company finances are what historically allowed analysts to make sound earnings predictions for the investment houses they represent.

Granted, there has always been a certain amount of Three Card Monte with earnings predictions. Technology companies in particular have always played a game of downplaying their projections for analysts, so they can hit the Street with surprise earnings each quarter. But last week’s blowout earnings are nothing short of an embarrassment for professional analysts.

Analysts Growing Obsolete?

Bloggers have noted there is less and less incentive for investment houses to fund sell side research. The best talent is flowing to the buy side. With the speed at which information is disseminated on the internet, along with a host of noteworthy finance bloggers, I find it increasingly unclear why anyone would pay for sell side research. As individual investors become even more empowered, the internet (read:ValueWiki!) will increasingly fill the research void left by the collapse of sell side research and the slower speed of mainstream media.

Google to Overtake Microsoft by 2014?

ValleyWag has an interesting analysis of all the stunning dot-com earnings announcements this week. If everyone continues at their current growth rates, Yahoo will languish and Google will overtake Microsoft in total earnings by 2014.

The Myth of the “Paid Basher”

“I think you’re a paid basher looking for some cheap shares!”
— InvestorsHub Message Board

Post anything mildly critical on a stock message board, and chances are someone will eventually call you a paid basher. No matter how cogent your argument, you will soon find yourself on the defensive, with your credibility on the run.

I am NOT a paid basher, I am not paid for posting anything on this or any other board. If marilynt claims I am a paid basher, I request that the proof be put on this board…I know if I accused a poster here of being paid to pump this stock, my post would be immediately removed. Posted by LoanStew on InvestorsHub

“Confessions of a Paid Basher”

To prove “paid bashers” exist, message board regulars will post this Confessions of a Paid Basher, allegedly written by a guilt-ridden employee of Global Calumny Funds in Stamford, CT. This confessed “paid basher” outlines how he is paid to manipulate stock message boards, and cites specific message board aliases such as Janice Shell. This article is held up as final proof of the paid basher conspiracy. But there’s just one problem…

It’s a Fake

The first version of the “Paid Basher Confession” was posted as a joke in November, 2000 to the Raging Bull message board by Steve Tracy, aka Firebird_1965. Tracy claimed to work for a boiler room operation in Stamford, Connecticut called Franklin Andrews Kramer & Edelstein. The ensuing frenzy prompted RagingBull to remove the post. However, it quickly migrated to other stock message boards and continues to wreak havoc to this day.

The post is linked to regularly from every stock message board. Here it is on April 18, 2007 on StockHouse.ca’s “BullBoards”. Here is the same post over at Allstocks.com. And here it is on Digg.com.

The original hoax is so specific, that its details now appear as referenced facts throughout message board culture. Notice how the pay structure details are noted in this “Bashers Handbook” on Stockhouse.ca. Or notice this poster’s reference to Mendacious Capital Partners. “Mendacious” is alleged to be hiring paid bashers, and is also located in Stamford, Connecticut. Look at the care that went into creating this website. But tell me, what sort of investment company would name themselves, “Mendacious”?

Why Paid Bashing Doesn’t Exist

There are only two possible profit motives of “paid bashing”: to short a stock or buy it at a cheaper price. But either explanation falls flat. Only microcap stocks are small enough to conceivably be manipulated by an online message board. But it is virtually impossible to find a broker who will allow anyone to short a stock under $5. Not only is shorting penny stocks closely regulated, but it seems obvious that brokerages would quickly go bankrupt if they allowed the practice.

As for the idea that an investment company would need to manipulate message boards to buy penny stock shares at a cheaper price, well, I find it deeply unlikely. I’ve followed these accusations on stock message boards for more than a decade, and not one ounce of proof has ever been produced. It is clear that the burden of proof is to provide evidence that such operations do exist, since there is only evidence that they do not.

Myth-Busting

ValueWiki welcomes your investigative journalism. If you can prove the existence of a paid basher/pumper company, please email me at jonathan (at) valuewiki (dot) com. I will preserve your anonymity and publish any verifiable information you can produce.