Tag: Rocker Partners

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Article: Who (Almost) Killed Home Capital Group?

Article - Media, Publications

Who (Almost) Killed Home Capital Group?

Featured Posts, Investments, 02 April 2021

I am still coming to terms with the collapse in shares of Home Capital. It wasn’t supposed to play out this way. The Canadian alternative mortgage lender saw its shares fall from an all-time high of $54.86 in August of 2014 to a low of $5.85 in May of 2017. At the time, I was working as an analyst at one of Canada’s largest asset managers. I spent 2014 and 2015 following only the Canadian banking sector. I saw the events at Home Capital up close.

The company was in the crosshairs of short sellers for years prior to its 2017 crisis. As an alternative lender in Canada’s frothy housing market, many shorts saw parallels between Home Capital and some of the worst-performing American subprime lenders. Steve Eisman, made famous in Michael Lewis’ The Big Short for his success betting against the US subprime bubble, was one of the first to come out publicly as a bear on Home Capital in 2013. And from there the criticisms continued for years. Continue reading “Article: Who (Almost) Killed Home Capital Group?”

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Subject: David Rocker

People

David A. Rocker  (born 1943) founded the hedge fund Rocker Partners, LP. Rocker holds a magna cum laude bachelors from Harvard College and a master of business administration from Harvard Business School. Rocker and his wife, Marian, reside in Florida and New Jersey. They have two sons.

In 1969, Rocker joined Mitchell Hutchins, where he was a research analyst and investment banker. In 1972, he hired on at Steinhardt, Fine, Berkowitz & Co., a pioneering hedge fund, and was a general partner there from 1973 to 1981. Rocker joined Century Capital, a registered investment adviser, as a partner in 1981. While there, he was a portfolio manager for institutional clients. Continue reading “Subject: David Rocker”

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Web: Wikipedia – Naked Short Selling

Web

Naked Short Selling

Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing the security or ensuring that the security can be borrowed, as is conventionally done in a short sale. When the seller does not obtain the shares within the required time frame, the result is known as a “failure to deliver” (“FTD”). The transaction generally remains open until the shares are acquired by the seller, or the seller’s broker settles the trade.

Continue reading “Web: Wikipedia – Naked Short Selling”

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Paper: Counterfeiting Stock

Paper

Counterfeiting Stock

Anna McParland

The Creation of Counterfeit Shares — There are a variety of names that the securities industry has dreamed up that are euphemisms for counterfeit shares. Don’t be fooled : Unless the short seller has actually borrowed a real share from the account of a long investor, the short sale is counterfeit. It doesn’t matter what you call it and it may become non–counterfeit if a share is later borrowed, but until then, there are more shares in the system than the company has sold.

The magnitude of the counterfeiting is hundreds of millions of shares every day, and it may be in the billions. The real answer is locked within the prime brokers and the DTC. Incidentally, counterfeiting of securities is as

It is estimated that 1000 small companies have been put out of business by the shorts.

PDF (12 Pages): Paper Counterfeiting Stock

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Article: The Hedge Fund Industry: an increasingly litigious environment

Article - Media, Publications

The Hedge Fund Industry: an increasingly litigious environment

cms lawnow, 12 December 2006

In July 2006, Fairfax Financial Holdings Limited (the insurance and financial services holding company based in Toronto Canada) brought a legal action in the Superior Court of New Jersey against a number of prominent US based hedge funds including S.A.C. Capital Management (the $10billion hedge fund operated by Stephen Cohen), Exis Capital Management, Lone Pine Capital, Rocker Partners L.P. and Third Point LLC alleging stock market manipulation. Continue reading “Article: The Hedge Fund Industry: an increasingly litigious environment”

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Article: In Pursuit of the Naked Short by Alexis Stokes

Article - Academic

In Pursuit of the Naked Short

Alexis Stokes, Texas State University

Journal of Law and Business 5/1 (Spring 2009)

This article explores the origins of naked short-selling litigation; considers
the failures of significant naked short-selling lawsuits in federal court;
surveys the obstacles erected collectively by constitutional standing requirements, the Federal Rules of Civil Procedure, the Private Securities Litigation Reform Act, brokerage firms, death spiral financiers, and the Depository Trust and Clearing Corporation; examines the efficacy of Regulation SHO, SEC rule 10b-21, and new FINRA rules; discusses recent state legislation and state court litigation; and identifies non-litigation options to curb naked short-selling. Ultimately, this article seeks to answer the question: If manipulative naked short-selling is more than a mythological scapegoat for
small cap failure, what remedies are, or should be, available?

PDF (62 Pages): Article In Pursuit of the Naked Short

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Paper: The Deep Capture Story by Mark Mitchell

Paper

The Story of Deep Capture

By Mark Mitchell, with reporting by the Deep Capture Team

The Columbia School of Journalism is our nation’s finest. They grant the Pulitzer Prize, and their journal, The Columbia Journalism Review, is the profession’s gold standard. CJR reporters are high priests of a decaying temple, tending a flame in a land going dark. In 2006 a CJR editor (a seasoned journalist formerly with Time magazine in Asia, The Wall Street Journal Europe, and The Far Eastern Economic Review) called me to discuss suspicions he was forming about the US financial media. I gave him leads but warned, “Chasing this will take you down a rabbit hole with no bottom.” For months he pursued his story against pressure and threats he once described as, “something out of a Hollywood B movie, but unlike the movies, the evil corporations fighting the journalist are not thugs burying toxic waste, they are Wall Street and the financial media itself.” His exposé reveals a circle of corruption enclosing venerable Wall Street banks, shady offshore financiers, and suspiciously compliant reporters at The Wall Street Journal, Fortune, CNBC, and The New York Times. If you ever wonder how reporters react when a journalist investigates them (answer: like white-collar crooks they dodge interviews, lie, and hide behind lawyers), or if financial corruption interests you, then this is for you. It makes Grisham read like a book of bedtime stories, and exposes a scandal that may make Enron look like an afternoon tea.

Introduction By Patrick M. Byrne, Deep Capture Reporter

PDF (69 Pages): Deep Capture Story

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Article: Overstock.com dukes it out with short sellers

Article - Media, Publications

Overstock.com dukes it out with short sellers

The Associated Press, 12 June 2006

Most people buy stock hoping the price goes up, but hedge fund manager David Rocker was “shorting” shares of Utah-based Internet retailer Overstock.com Inc., betting the share price would decline.

Rocker’s fund was making a legal bet that Overstock shares in 2004 were overvalued and due for a correction. Overstock.com CEO Patrick Byrne, however, sued, accusing New York-based Rocker Partners of collaborating on disparaging reports with the stock-research firm Gradient Analytics of Scottsdale, Ariz., while Rocker was shorting the shares. Continue reading “Article: Overstock.com dukes it out with short sellers”

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Article: Overstock.com CEO Patrick Byrne is waging an EXTRAORDINARY CAMPAIGN against short-sellers. The hedge fund guys say he has underperformed. He says they are tools of a sinister “SITH LORD.”

Article - Media, Publications

Overstock.com CEO Patrick Byrne is waging an EXTRAORDINARY CAMPAIGN against short-sellers. The hedge fund guys say he has underperformed. He says they are tools of a sinister “SITH LORD.”

BETHANY MCLEAN, 14 November 2005

Even hardened denizens of Wall Street were shocked by a conference call that Patrick Byrne, the CEO of online retailer Overstock.com, held on Aug. 12. “I want to get something off my chest,” Byrne announced. Then he launched into a rant about a “miscreants ball” in which he mentioned hedge funds, journalists, investigators, trial lawyers, the SEC, and even Eliot Spitzer. “I believe there’s been a plan since we were in our teens to destroy our stock, drive it down to $6–$10 … and even a plan for how the company would then get whacked up.” The “designated final owner,” who provided the “orchestration,” was someone Byrne dubbed the “Sith Lord,” a person he refused to identify other than to say that “he’s one of the master criminals from the 1980s.” And that’s just the basic outline. There was more. As Mark Cuban, the billionaire investor, later wrote on his blog, “Never before in the history of Wall Street has a single conference call mentioned the following topics: miscreants, an unnamed Sith Lord he hopes the feds will bury under a prison, gay bathhouses, whether he is gay, does cocaine, both or neither, and an obligatory ‘not that there is anything wrong with that,’ phone taps, phone lines misdirected to Mexico, arrested reporters, payoffs, conspiracies, crooks, egomaniacs, fools, paranoia, which newspapers are shills and for who, payoffs, money laundering, his Irish temper, false identities, threats, intimidation, and private investigators. All in 61 minutes.” Cuban is now short 20,000 shares of Overstock. Continue reading “Article: Overstock.com CEO Patrick Byrne is waging an EXTRAORDINARY CAMPAIGN against short-sellers. The hedge fund guys say he has underperformed. He says they are tools of a sinister “SITH LORD.””

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Article: Overstock’s Three Affidavits

Article - Media, Publications

Overstock’s Three Affidavits

John Reeves, 05 October 2005

The nearly endless fount of mirth surrounding Patrick Byrne’s lawsuit against Gradient Analytics, short-selling hedge fund Rocker Partners, and others is obscuring a case with fairly broad implications for security analysis, First Amendment rights, and the credibility of our public markets.

While fanciful visions of Sith Lords and evil shorting hordes make for good copy, this is a lawsuit that is about something more substantive: an accusation that Gradient and Rocker resorted to unfair business practices to knock down Overstock.com’s (NASDAQ:OSTK) share price. Too much coverage has been spent plumbing the entertainment value, and nearly none on the facts of the suit itself. Continue reading “Article: Overstock’s Three Affidavits”

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