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In a little less than two weeks, footnoted will celebrate its fifth
anniversary and in all of that time writing about odd disclosures at
all sorts of companies, I’ve managed to avoid writing about Overstock
(OSTK). It was definitely a conscious decision, mostly because so many
other people were beating the drum, including my friend Herb Greenberg,
who’s now gone into the research business, leaving a gaping void, especially when it comes to Overstock. (The backstory is here for those unfamiliar with the details).
But the 10Q
that Overstock filed on Monday was simply too interesting to ignore.
That’s because the filing had lots of new warnings about the real estate
business that it introduced back in May. In addition to regular
listings, the site tries to bring some order to the chaos involved in
searching for distressed properties and foreclosures, though my own
quick experimentation with the site didn’t bring in nearly as many
properties as I was able to find on Countrywide’s REO site,
which only lists foreclosures for one institution. That could be
because at least based on disclosures in the Q, people have to
advertise to appear on the site and it’s unclear why banks that already
have their own systems in place would sign up.
Indeed, the risk factors involved in the real estate business are
fairly extensive, according to the Q, where they’re buried at the very
end of the filing:
The law regarding the potential liability of an
online listing service for real estate sales is not clear. The platform
of the listing service will be accessible to those subscribers who will
have the ability to feature their real estate for sale and will supply
the text descriptions of the real estate, including the general
condition of the real estate and other important information. We will
have no ability beforehand to know if the information sellers provide
is correct.
There was one other interesting new tidbit in the filing about naked short selling, which we last footnoted here:
Additionally, Dr. Patrick Byrne and the company have
fostered and supported a national debate concerning illegal trading
practices called “naked short selling” and have advocated regulatory
changes and enforcement action designed to end these practices. The
profile of the company and Dr. Byrne, and their positions on issues
associated with the debate, may make the company and Dr. Byrne the
target of criticism and derision in the financial markets and
associated media, and this may prove to have an adverse effect on the
company’s stock price.
Just don’t say you weren’t warned. It’s right there in the filing. Originally posted at: http://www.footnoted.org/
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