Sometimes it is painfully obvious that a reporter is spending a lot of time listening to her hedge fund sources. Case in point.
Morgenson keep speaking of evidence that shows Fairfax didn’t have an economic interest in Odyssey, but won’t provide it. The IRS has twice ruled in the company’s favor. All she has is the recanted opinion of a former banker, chivvied out of discovery in separate litigation.
This company absolutely destroyed its mid-2000s shorts. Furthermore, it uncovered an extremely distasteful behavior pattern between second-tier researchers and hedge funds to create and trade on negative research. A NJ judge opined that “it’s clear here that there was evidence of intent to adversely affect [fairfax’s] actual business dealings”. Fairfax has lost its lawsuits, but it certainly achieved its objectives of putting these funds back on their heels, even prompting one hedgie to some rhetorical excess:
“Prem Watsa bend over the hedge funds have something special for you,” Loeb wrote in the June 25, 2006 email to Adam Sender, the founder of Exis Capital, whose hedge fund also was “shorting” Fairfax — that is, looking to profit from a decline in its shares. A little later that day, in an email to a consultant who was doing research for some of the hedge funds wagering on Fairfax’s fall, Loeb wrote: “die, Prem Die!”
At least one investor had the humility to change his mind.
Is it possible this case will only be re-tried in the fantasies of those wounded hedgies and their reporter buddies?