No One Intends to Be a Small Cap Company

Posted by , Mar 30, 2006, 1:17pm

Gary Weiss and Mark Cuban are both making arguments that if you're the CEO Biovail or Overstock and your stock is death-spiraling toward small cap oblivion, you can't really blame an itty bitty research firm in Arizona for your company's overall poor performance. And we can't argue with that. No one's entertaining the notion that Patrick Byrne is was the next Jack Welch.

But if, hypothetically, you had a "shareholder activist" who ran a $7bln fund in Connecticut heavily invested in your company and that investor had the potential to bash your other shareholders over the head with a negative research report, you'd probably pay attention to that guy and you'd probably pay attention the firms positioned to issue the negative research reports.

That said, the primary difference between activist-bully and an activist-populist is perception and good press. How do we know this? Because we have a Venn diagram (see below) that says so. And as every first year analyst knows, anything is true if you put it into PowerPoint:

activist.jpg

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Posted by Daniel M. Harrison, Mar 30, 2006 6:26PM

"And as every first year analyst knows, anything is true if you put it into PowerPoint"

I couldn't agree more: this kind of bullshit is, funnily enough, largely the product of academia however, as it tends to come directly from MBA programmes.

Posted by harvard homeboy, Apr 02, 2006 3:42PM

"No one's entertaining the notion that Patrick Byrne is was the next Jack Welch."


Good to know.

I didn't even think anyone was entertaining the notion that Partick Byrne was the next Jack Byrne.

But as Patrick's dad, Jack, has said, Patrick needs to run his business for a change instead of running his favorite crusade.

Meanwhile, the folks at the $7 billion fund in Connecticut who are shareholders of overvaluedstock.com must be thrilled that Patrick whacked $800 million of market cap off the market's valuation for the company last year. (Byrne, the guy with the Don Quixote complex and the fixation for litigating against naked shorts, took the stock down from $69 a share at the end of 2004 to $28.15 at the end of 2005).

And they actually PAY people to manage money at these firms like the outfit in Connecticut?

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