Weil on Finance, P.M.: Civil Short Seller
Hello again, View fans. Here are your annotated afternoon links.
An extremely polite short call
Here's something you don't see often: A hedge-fund manager who (1) shorts a company's stock, (2) tells the whole world why, (3) meets afterward with the company's top executives, and then (4) says nice things about them in a follow-up article explaining why he's still short the stock. In other words, the complete opposite of the Muddy Waters approach. Here's Whitney Tilson writing on Seeking Alpha's website about K12 Inc., an education company. He said he found the executives "to be refreshingly candid about K12's challenges and what the company is doing to address them, and believe that both of them are genuinely sincere in wanting to do right by the students who enroll at the company's schools." However, "I think their words are inconsistent with many things K12 is doing." How civil.
Sign of the times for tech
Jim Edwards at Business Insider has a sharp article laying out "the evidence that the tech sector is in a massive bubble." My favorite: "There are more Facebook ad agencies than regular ad agencies."
Now that SAC Capital has agreed to plead guilty, let's go back to talking about JPMorgan's criminal probe
William Black, the law professor at University of Missouri at Kansas City and former regulator who loves to write about prosecuting so-called control frauds, has a provocative piece today about the Justice Department's investigation of JPMorgan Chase and other banks: "Recall that the DOJ leadership and President Obama routinely downplay `fraud' as a cause of the financial crisis, yet the DOJ’s insipid investigations have confirmed `nationwide' fraud by the world’s largest banks. The DOJ, however, refuses to prosecute anyone to date and refuses to even bring civil fraud cases against the twin epidemics of loan origination fraud. How can this be? . . . Because criminal referrals by the regulatory agencies virtually ceased against elite bankers in this crisis as the anti-regulatory agency heads destroyed the essential agency criminal referral process."
Richard Fisher on hog-tied government and scotch
The Dallas Fed president delivered a speech in Australia today in which he bemoaned how the "inability of our government to get its act together has countered the procyclical role of the Federal Reserve." But my favorite part was a funny story about his father, who was Australian: "My dad lived to the ripe old age of 90. He was a tough old bird. And Aussie to the bone. For most of his life, he smoked three packs of cigarettes a day and drank a great deal of Scotch. He admitted to this one evening and a friend said, `Hold on. My father was a smoker and also drank a lot of Scotch. But he died at 60. What gives?' To which my father replied, `Well, he just didn’t do it long enough.'"
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)