Mar 2, 2005

Mark Cuban is Happy he sold

The .com billionaire has an interesting thread going on short selling. I agree 100% with his view that a company's complaints about short interest are a giant red flag. He ends with an interesting little tidbit on former highflier (MAMA).

4. Finally, and this has nothing to do with Naked Shorting, I wanted to reference I had purchased stock in in hope that it could be an up and coming search engine. I thought I had done some level of due diligence. Talked to the company management. Talked to some employees who worked in sales. Read the SEC Filings. I knew that they had a checkered past and had been linked to stock promoter Irving Kott, and that their law firm still handled some of Kotts business, but the CEO, Chairman, lawyers all said that things were reformed and the company was focused on its business.

Then the company did a PIPE financing. I'm not going to discuss the good or bad of PIPE financing other than to say that to me its a huge red flag and I dont want to own stock in companies that use this method of financing . Why ? Because I dont like the idea of selling in a private placement, stock for less than the market price, and then to make matters worse, pushing the price lower with the issuance of warrants. So I sold the stock.

I bring all of this up now, because in one of the comments in the Naked Shorting thread, a poster mentioned Lines Overseas Management of Bermuda and how there had been allegations made against them ( That rang a bell. Turns out this was the same company that's current CFO used for a private placement for Mamma (

I said at the top that I found out some interesting things in this thread, this was probably the most interesting. I will leave you to make your own decision as to whether this connection matters or not. I'm glad I sold my stock.

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