The naked shorting causes artificially lower prices and that hurts the companies themselves. Their borrowing costs go up and their ability to conduct business can be hurt. Further it disrupts the integrity of the equity market because the guy who bought from the naked short may never receive the stock. He can be put out of a favorable dividend treatment, shareholder vote, or tender. It's a victimless crime the same way killing someone in the dark is.
flytiger has been on this for years. I used to argue with him about the theory. But, congrats to him for being on this story for a long time and having it corrrect.
There is another rub. I can't publically say what I know, what I have personally witnessed. It is onerous. But the bad guys can say and do anything, and they do. They've done it for years. Patrick is the smartest guy I've ever met. He can expertly talk everything from Philosophy to Engineering. Nobody could talk him off this, and they tried. They tried to bribe him, bribe others to give him up....... . Now think critically. Here's a guy who's had cancer bouts, knows what is going to kill him, knows he hasn't got forever. And for reasons greater than most people can even imagine, this is one of the fights he has chosen. He could do anything he wants. He chooses this. Think carefully when you make your wager. I 've had a very introspective week going back to the late 90's watching this play out. I really don't care that much anymore, because we deserve what we get. But it is going to be interesting. This is going to be a tidal wave. 50bb is alot of money, and like any disease, this one will spread to. There is no vaccine.
Oh, why do I even bother. It can't be said better than this........... http://www.businessinsider.com/overstockcom-ceo-explains-anti-sac-ad-2013-7#ixzz2aM1JWqCq I'm thinking he should get their mailing list, and send the SAC people Overstock coupons. You know what. Play dirty, use theats and violence, you'd better win. They didn't win. I just hope the politicos who took his money are outed. He spent a lot.
Kudos to Patrick. Hedge funds paid the media to push his stock down and now hes paying the media to push a hedge fund down. On another note, I'm not sure how much an SAC liquidation will actually impact the market. 50 billion might seem like a lot but the overall market is 15 trillion and I don't think most of it will actually be "forced selling". I'm guessing probably half will be done over a couple months.
Anyone who is long the stock, the employees of the company and its creditors, as illegal naked shorting drives companies out of business or to the point where there can be a successful hostile takeover by affiliates of those doing the naked shorting.
Most CEOs who complain about naked short sellers are operating frauds, or trying to draw attention away from their own poor performance. There are tons of companies out there with heavy short interest. Almost all of them are legitimate companies that just run their business, and let the stock price take care of itself. In Overstock's place, their borrowing costs will not be affected as they have no debt. Even if a company has debt and their stock is depressed by short selling, I am skeptical this would have any impact on their cost of borrowing, as lenders judge credit worthiness based on credit ratios, fundamental performance, and business trends. I say this from my personal experience in high yield fixed income. As for your statement that someone buying naked shorted shares are somehow at a disadvantage..I have never heard of this or experienced anything like this. That said I think SAC is guilty and from what I know, they have always operated in grey areas at the very least.
It's not an isolated event. There are bribes to reporters, Spitzer was in bed with HF's and aided them with "investigations" as did the SEC. There were calls to suppliers, customers, and threats of violence. It is, in most instances, illegal. It has been ignored, and by our count, some 6000 companies bit the dust. Think that's some jobs there? And telling me the companies suck is like going to hospice and finishing off Grandma so you can go on vacation. It's faulty logic. I love the apologists on CNBC. "OH, he is a great trader". Bullshit. He's a great trader like David Copperfield makes tanks disappear. It's an allusion. Patrick said it best. Now let's move along, and make this a capitalistic country again.
Indeed. Thank you for your steadfast attention, flytiger, to this very important issue. I am always shocked when I come across someone who thinks it's no big deal.