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Showing posts from February, 2012

Overstock.com Was Ineligible to File a Registration Statement Last December

Yesterday, I described how Overstock.com (NASDAQ: OSTK) defaulted on its loan covenants with U.S. Bank because of its failure to a file timely report with the Securities and Exchange Commission. In addition, I detailed how the company improperly delayed disclosure of the loan default until it could obtain a waiver from the bank. Now it appears that Overstock.com’s failure to file a timely report with the S.E.C. made it ineligible to file its Form S-3 registration statement on December 9, 2011 where it is seeking to raise additional funds to keep the company afloat. In addition, Overstock.com's continuing failure to comply with S,E.C. rules could indicate that is has a material weakness in internal controls. The company seems to be incapable of complying with S.E.C. rules even as it faces a continuing investigation by the regulator into previous financial shenanigans.

Background

On March 21, 2011, Overstock.com filed a proxy statement and asked its shareholders to vote at the annual…

How Overstock.com Violated S.E.C Rules on Timely Disclosures and Delayed Reporting a Default on Bank Loan

Last Friday after the stock market closed, Overstock.com (NASDAQ: OSTK) filed an 8-K report and disclosed that it defaulted on its loan covenants with U.S. Bank. The loan default resulted from Overstock.com's failure to file timely reports with the Securities and Exchange Commission. The bank granted the company a waiver of default. However, a close examination of the company’s various S.E.C. filings reveals that Overstock.com committed another securities law violation. The company improperly delayed the disclosure of the loan default to investors for several more weeks until it could resolve the default issue with the bank. Even in the face of an ongoing S.E.C. investigation into previous financial shenanigans, Overstock.com continues to flout securities law right under the nose of regulators.

Since public companies have up to four business days to file an 8-K report, they often choose to disclose negative news on a Friday, after the stock market closes and especially before a th…

Francis Chou's Funds Taking a Bath on Overstock.com Common Stock

Various mutual funds managed by Canadian investor Francis Chou have lost about $34.328 million to date on their collective investments in Overstock.com (NASDAQ: OSTK) based on an examination of publicly available documents. Those mutual funds currently own 3,260,738 shares of Overstock.com common stock at a total approximate cost of $56,989,945, an average cost of $17.48 per share. On Monday, Overstock.com shares closed at $6.95 per share placing the total market value of shares held by Chou’s mutual funds at $22,662,129. That's a decline of about 60% from their original cost. (Link to my calculations).

Back in 2004, Chou said, "If you stick to the principle of value investing, things will work out well for you. If you breach that principle, it will hurt you badly." In the past, Overstock.com has been caught fabricating profits and its CEO Patrick Byrne has attacked me for pointing out those violations of various accounting rules. Byrne has used thugs to pretext other jo…