Sold Short

Reviews / Votes

He's in the Index, TooLook for Wall Street and business-media types to scan index pages in the just-published Sold Short: Uncovering Deception in the Markets by famous short-seller Manuel P. Asensio. He delights in naming dozens of analysts, journalists and brokerages he says helped pump up dubious stocks that later tanked after he issued withering research reports. On the next-to-last page Asensio finally mentions the $75,000 fine he paid regulators last year to settle charges that, among other things, he and his Asensio & Co. overstated their own investment record.--Forbes May 28, 2001Short-sellers have a natural appeal to journalists. Members ofboth occupations require deep scepticism about the motives ofthe rich and powerful, and both engender a black humour thatcan be off-putting to the innocent and uninitiated.Short-selling is the sale of borrowed or never-owned securitieswith the intention of profiting from a decline in their price. Theprofit is made when the shares price has declined, and theshort-seller is able to repay the loan of the securities or makesgood the promise to deliver with securities bought at a lowerprice.The profit is limited to the price of the security at the time theshort sale is made; the loss can be as high as a security's pricecan rise.There are quiet, behind-the-scenes short-sellers - and thenthere is Manuel Asensio. His brokerage house, AsensioCompany, specialises in executing short sales for clients, someof which are almost certainly investment funds in which he hasan interest.He searches for frauds and simple overvaluations in thesecurities market, sells them short on behalf of his clients, andthen trumpets their shortcomings to the world.Along with other journalists, I have made use of Asensio'smaterial, though not without checking it first. When I did, itturned out to be quite reliable.Not everyone has the same feeling about Asensio. He isregularly sued by promoters and others connected with theobjects of his research and mockery. He has, however, onlypaid one fine to the National Association of Securities Dealers,and believes he has been vindicated after he agreed to thatsettlement.Now he has written a book, Sold Short, to tell the world how hedoes it.To use the type of military metaphor popular on Wall Street,Asensio is the sort you would choose to lead an infantry chargeagainst a fortified position. However, as another short-sellersays: "I think I'd prefer to wait for the armoured division."Even though the book has a professional co-author, Jack Barth,the tone is pure Asensio: attack, attack, attack. Promoters arescum. Establishment companies are corrupted by greed. Atypical sentence reads: "The bad guys were on the other side ofthe river, laughing, with their saddlebags full of loot." Asensiowas wise to choose short-selling over a career in the diplomaticservice.Sold Short is most useful for the detail it provides on the stockpromoter's bag of tricks. You can get more stringent, academicdetail on securities valuation from such classics as Graham andDodd's Securities Analysis, but the standard works are not asrevealing on the social, as well as the financial, patterns thatfraud takes.Another short-seller said Asensio's analysis was good, but thatthe market values of the companies he goes after were toosmall to have the liquidity a large fund needed.Asensio's response was an unrelenting lecture on the marketcaps of his targets along with cutting inferences about thecourage and work habits of the unnamed commentator.Sold Short is a helpful book, though not a literary masterpiece.The reader and the market participant should be fully aware thatAsensio is talking up (or down) his position. But he's verystraightforward about that.--Financial Times May 5, 2001 "Sold Short is a mixture of personal history and war stories about Asensio's battles with various companies. It's a walk through the sleazy side of Wall Street, providing ample evidence that analysts and mutual fund managers are quite capable of ignoring both fraud and incompetence if there's a chance to make a buck." (Fortune Magazine)"Sold Short is most useful for the detail it provides on the stock promoter's bag of tricks.the standard work are not as revealing on the social, as well as the financial, patterns that fraud takes.Sold Short is a helpful book." (Financial Times)"Asensio's no-nonsense writing style sets his book apart from the usual staid and pompous investment coverage.his book is fun to read; its skeptical approach to Wall Street hype should find a ready audience among the millions of investors." (Publishers Weekly)