Monday, May 24, 2010

Whitney Tilson Score! Interoil Spanked for 7% on the Day (IOC)

UPDATE II: Make that (8.26%).
I had meant to include this, from Market Folly:
...T2 Partners' ten largest short positions heading into this year were (in alphabetical order):
1. Capital One (COF): In T2's letter, Tilson and Tongue mention that this is a hedge to their long of American Express (AXP).

2. Dow Chemical (DOW): This is a hedge to their long position in Huntsman (HUN).

3. Homebuilders (various plus an ETF): T2 Partners has been bearish on the housing market.

4. InterOil (IOC): Tilson has been bearish on this name for a while and argues that all their press releases (there's a lot of them) have artificially lifted the stock higher on no substantial news....
Original post:
The stock is changing hands at $46.25 down 7.07%.
Back in March we posted "Whitney Tilson: Score! In a Move that Stunned Wall Street (and Soros and Goldman) InterOil has Problems (IOC; GS)":

UPDATE III: "Barry Minkow (ZZZZ Best Fraudster) on InterOil CEO's Bad Faith Bankruptcy of Nikiski Partners (IOC)"
"InterOil Won't Comment to NYSE On Today's Unusual Market Activity" (IOC)":

The blurb isn't crystal clear whether IOC stated their policy to the reporter or the NYSE.
If the latter, oops....
UPDATE: "InterOil: More Big Name Owners: Wells Fargo (IOC; WFC)"
Original post:
The stock closed down 12.63% at $62.01.
Bre-X anyone?
Our last post on IOC was "Interoil: Company Swings to Profit; Goldman Sachs Joins Soros as Shareholders (IOC)":
The stock is down 11 cents at $64.00 in early pre-market trade.
This is an odd one and there are enough undercurrents to get my antennae twitching....
Which post was immediately followed by "My Favorite Stock Scam Blowhards":
Re-reading the email from the senior manager of InterOil's media relations department reminded me of one of the best ever. I referenced it in a post on Planktos which long time readers will remember as one of the best shorts ever....
The next day "13F: Soros Dumps Solar and Potash, Buys Oil (and a bunch of other stuff) (GS; MON; POT; SOL)":
Hey! we were just talking about George and his InterOil position yesterday.
Of note: He sold his Goldman Sachs puts....
Here's the latest. From Sam Antar (Crazy Eddie fraudster) whose "about me" says "I am a convicted felon and a former CPA" (insert family shame joke here):

Is InterOil Built on a Foundation of Fraud?
A report by former LA Times reporter William Lobdell in iBusiness Reporting and an accompanying press release by Fraud Discovery Institute provide disturbing details of fraud allegations made in an ongoing court case by the original investors in InterOil (NYSE: IOC) against company CEO Phil Mulacek. The court documents obtained by Lobdell provide an inside look into Mulecek's desperate court room antics to avoid responsibility for his actions which were later scolded by the Judge in the case. In addition, filings with the Canadian Securities Commissions show that InterOil insiders dumped about $10 million of stock in recent weeks.

iBusiness Reporting is a division of Fraud Discovery Institute (co-founded by convicted felon, now fraud fighter Barry Minkow). Both Lobdell and Minkow publicly acknowledge holding short positions in InterOil securities. Read Lobdell's entire report here.

Fraud Discovery's self explanatory press release is re-printed below. Additional information and my commentary follow it...
I had forgotten the darn thing until it showed up on the percent loser list.
In case you're curious why we pay attention to Mr. Tilson, here's Market Folly from last week:

Hedge Fund T2 Partners: Bearish on Housing, Bullish on Beer (Value Investing Congress Presentation):
Today we're covering in detail the recent presentation from Whitney Tilson and Glenn Tongue of hedge fund T2 Partners from the Value Investing Congress. Since inception, T2 is up 184.4% compared to an S&P 500 return of 17.7% over the same timeframe....
See also:
"Raymond James on InterOil: Move Along, Nothing to See Here (IOC)"

"Media relations emails of the day, Interoil edition" (IOC)

Morgan Stanley on InterOil: "Mischaracterization of the Investment Debate: Stock Set to Outperform in April" (IOC):

Most analyst writing is so bland. I like the guy who not only tells you the stock is going to run but the month it will happen. The fact that such fore-knowlege* is available to very few makes it extra-special.
From the research report:

...InterOil Corp. (IOC, $62.01, Overweight, Price Target $120)...
I guess it did, sort of, outperform in April. Here's the chart for the period overlapping the analyst call, March 15-May 24 (via BigCharts):