Tesla stock has had a volatile year thus far, swinging as much as 20 percent down in October after rising as much as 20 percent in August. Shares of Tesla got a boost from Musk settling fraud charges with the Securities and Exchange Commission on Sept. 29, which brought to a conclusion a saga that began in early August.
Another activist fund declared Tuesday it was buying Tesla stock ahead of the company’s earnings report, with Richard Pearson’s Moxreports saying in a tweet that he thinks “numbers will be blowout.” Pearson said shares of Tesla will go above $300 after the earnings report.
(A few notes to provide clarity on the article above: First, the person suing Tesla was Andrew Left, not me. I was just mentioned separately in that same article. Second, I am a private investor, not a fund. Finally, my expectation of “blowout” earnings was based on nothing more than the fact that Elon Musk had moved forward the date for Tesla’s earnings announcement. That simple fact told me all I needed to know. Telsa soon-announced earnings were in fact “blowout” and the share price quickly went to north of $350. Tesla’s share price would later retreat quite a bit. But this move from $260 to $350 was a very intuitive trade, simply due to the telegraphing from Mr. Musk.)
Extreme Short-Selling Becomes Even More Dangerous
(Bloomberg, November 2017)
Richard Pearson, a short-seller who earlier this year flipped and began buying the shares of companies that had been heavily bet against, says a reason the companies have befuddled his former compatriots is the credit market. Many of the companies have a lot of debt. But interest rates have stayed low, and credit has continued to flow. That’s made it easier for companies to maintain large debt loads. Slightly better results are amplified by high leverage. Second, it’s another sign that there is perhaps too much money in hedge funds, often the source of most short bets. Pearson says the “2/20 guys” appear to be chasing the same investments and “doing no work.”
Activist Shorts In 2017 – Short Sellers Take Pause
(Activist Insight, July 2017)
Richard Pearson, told Activist Insight Monthly that he was passing on more ideas than usual, as markets cannot be relied on to digest the information properly. At least three times in the past two years, observers had called an end to the bull-market but been proven wrong, he says, citing external shocks such as China, Brexit and the U.S. election. “The problem from the short side is that we could see another 1999 super-surge before the markets correct,” he says.
Surprise! People weren’t analyzing biotech penny stocks just for kicks
(Financial Times, April 2017)
…it shouldn’t really be surprising to hear that stock promoters are charged with secretly sponsoring more than 250 positive posts about small-cap stocks on sites like Seeking Alpha between 2011 and 2014, according to a raft of SEC filings.
…The site’s editor-in-chief reminds us that they had found out about paid promotional posts and removed them back in 2014, with a tip from SA blogger Richard Pearson.
The promoters also secretly paid writers to contribute to other sites, according to the SEC, with varying levels of brand recognition and credibility: Forbes.com, TheStreet.com and something called ‘SmallCap Network’, to name a few. (None on Alphaville, of course!) The writers did so under a colourful array of pseudonyms like The Swiss Trader, Amy Baldwin, Equity Options Guru, Wonderful Wizard, Itradethebios, Cris Frangold, and so on.
Northwest Bio: Biotech Accused in Stock-Pump Scheme
(Barron’s, July 2014)
In a lengthy, highly detailed article for Seeking Alpha, Richard Pearson, a private long-short investor known for conducting deep investigations into the marketing practices of small companies, writes that “the driving force behind Northwest Bio’s share price has been a string of promotional articles from a variety of authors which have issued very bullish predictions for the stock.”
(Seeking Alpha has labeled the article as a “Editor’s Pick,” a status reserved for work that the editors on the site consider to be of particularly high quality.)
Pearson contended that “many of the authors who have written on Northwest are using fake identities and fake credentials. They pretend to be biologists, other scientists, or fund managers. In fact, they are just paid writers.”…….
….But Northwest Bio CEO Linda Powers denied all the charges contained in the Seeking Alpha Piece. “Each of the major points about us are not accurate,” she told Barrons.com Monday. “Pearson writes that the stock price has gone up because of promotional articles. Nowhere does he mention the real reason, that the company has made tremendous operational progress.”
An Insider’s Tale of a Stock Promotion Plan
(Barron’s, March 2014)
Pearson, who has written for several financial websites previously, describes how he played along with Dream Team in an effort to document and eventually expose what he viewed as a “pump and dump” scheme. He says he kept detailed notes of e-mail exchanges and phone calls and reveals many of those exchanges in his lengthy article.
Pearson told Barrons.com that following his dealings with Dream Team and some class-action lawsuits against Galena that brought down the share price, he decided in late February to take a short position in CytRx. He says he has no position in Galena.
When I asked Pearson whether his short position in CytRx compromises his credibility on the topic of the two biotoch stocks, he retorted, “I didn’t write this article because I’m short the stock. I’m short the stock because I found out about this problem. I didn’t go out looking for this stock. Someone called me and asked me to do a paid and undisclosed promotion.”
Special report: The “shorts” who popped a China bubble
(Reuters, June 2011)
Rick Pearson is one China specialist who actually knows the country: He studied finance and Mandarin at the University of Southern California and began traveling to China in the early 1990s, spending six years there all told.
Pearson said in June he began to realize that some Chinese stocks were “a giant Ponzi scheme.”
Still, Pearson resists being grouped with other shorts, arguing he would rather be long Chinese stocks and expressing concern that the moniker will impede his access in China.
He says he thinks the China small-cap short trade may be close to an end as a viable strategy. “There’s too many stocks whose share prices are already too low. There’s too many stocks that have already been attacked by people. In my opinion it doesn’t necessarily make a lot of sense to go shorting a $3 stock.”