by Patrick Byrne
I do not normally take the time to respond to most pieces that get written about me, let alone ones that are a month old, but some weeks ago in a tweet I dismissed this piece by Mathew Yamamoto and he has been asking me to explain why I did. He has been courteous enough to send me the article in question. Let me stipulate that I do not find anything egregious in Mathew’s mistakes: his work is somewhat better than average, actually (and far better than Abha Bhatteria’s, as analyzed here “Come See the Sausage Being Made”). If I were still grading university papers I would give it… Well, I will let you go to Twitter and grade it yourself.
In any case, I am reprinting Matt’s article here, with my comments, as it presents an opportunity to show the public how sloppy journalism causes inaccuracies to enter and then propagate within the discourse. Remember, people pay $1,000/year to subscribe to Matt’s work. So read this knowing that this is the level of error the public can expect from expensive journalism.
I will follow my normal convention of interlacing my text in italics with Matt’s original.
Overstock and the boardroom squabble
October 7, 2019, 7:30AM EST · 3 min read
BY MATTHEW YAMAMOTO
* Overstock’s drama-filled saga persists, this time with ex-CEO Patrick Byrne’s feelings that he was “betrayed” by the board.
I never used the word “betrayed” in explaining this to Gasparino and feel it is mischaracterizes my feelings. I would describe my feelings more as “exasperation and fatigue with politics.” So Mathew is now using one word from another journalist’s (loose) interpretation of my feelings and presenting it as a factual description of my position, in quotation marks, thereby appearing to attribute it to me. Is that good journalism? Or is that loosey-goosey? Suppose I were to write a piece about Mathew and say, “Mathew Yamamoto feels that he is ‘inadequate’ as a journalist because he has been caught propagating other journalists’ errors without researching quotes and claims himself….” And I never explained that he never said that about himself, but that it was someone else’s interpretation of his state of mind: would that be fair to Mathew?
* What was once his pack of “coyotes,” Patrick noted how all the board members but one wanted him dissociated with the firm.
This is gibberish: Matt is propogating an error that appeared in Abha Bhatteria’s Washington post article, and amplifying it, like he did with Gasparino in the previous point.
Here are the facts: Five years ago there was a group of executives who called themselves “the Wolf Pack” because they focused on fixing and refining operational matters (I believe it was a reference to Pulp Fiction’s “Mr. Wolf”). In response, a group of younger executives who worked together a lot, mostly on techno-analytic issues, started calling themselves “the coyotes”. There were five of them. Two or three drizzled out of the firm along the way in the last 5 years. The phrase has nothing to do with anything at this point, and I have not even heard it used for about three years. And it never had anything to do with “all the board members” or, for that matter, ANY of the board members. So here, Matt’s claim above is just nonsense on stilts.
* Adding insult to injury, Byrne seems to believe his old enemy, Marc Cohodes, played a role in the Board’s decision.
Well, maybe. Or maybe this is more sloppiness. See below.
Once again, I’m here to give you Overstock’s weekly drama. This time it’s a story of betrayal, at least in the eyes of ex-CEO Patrick Byrne. Is it odd how insistent Matt is on using the word “betrayal” though I never used it myself? Having taken Gasparino’s mischaracterization of my position at face value, and using the word in quotes above to appear to attribute it to me, Matt now takes it as a fact that he has established.
* In last week’s column, we explored the rather suspicious timing of Byrne’s $90 million stock sell-off.
"Explored" it in another piece that was written without reaching out to me for comment (as far as I know), and is chock-full of even worse journalistic sins. There was nothing suspicious about it: I supplied Gasparino the facts and correspondence related to it, and he went back on Fox and said, "He provided to me tick-tocks with names and dates on why he sold when he felt like was lied to, 20 years of abuse… Screw it I’m leaving the country…. That’s when he sold all his shares."
Sequence of events:
Sept. 16-18 – Byrne sells his remaining Overstock shares over a three-day period to the tune of $90 million
Sept. 17 – Greg Iverson, Overstock CFO, resigns without a separation agreement
Sept. 23 – Company announces Iverson’s resignation and lowers guidance for 3Q19
Sept. 24 – Company files an S-3 automatic shelf registration, a similar play as last year before it sold 5.8 million shares in an ATM public offering
Byrne claims he had no access to insider information, but instead sold for reasons that “had nothing to do with the operations or results of the firm.”
Question was: What was the reason that caused Byrne to sell his shares?
Feeling of Betrayal
Again, using the word “betrayal” again and again when I never did and feel it mischaracterizes my position. Is that odd?
Journalist Charles Gasparino who has been in frequent talks with Byrne following his resignation, gave more details on Byrne’s motivations for selling in a segment on Fox Business News.
According to Gasparino, Byrne sold because he “felt betrayed” by the board based on what was written in a D&O insurance letter, although it’s not entirely clear what was said in that letter. At least Matt is now being precise enough for the reader to know that the “felt betrayed” quote comes not from me, but is how Gasparino characterizes my position. It is the fourth use in Mathew’s story, the second time in quotes, and yet…. I never said it. Does that seem like good journalism?
"He sold his house in Utah. He is living in Indonesia overseas right now. He never wants to step in the state of Utah again," Gasparino said.
A few days later, Gasparino expanded further on twitter:
Keep in mind, this is Byrne’s third or fourth explanation on why he sold his shares (first time it was because he claimed the SEC was canceling Overstock’s digital dividend, That is another fabrication. I never said I sold because I “claimed the SEC was cancelling Overstock’s digital dividend”, and in fact when I set up everything to sell and then went to Asia I did not know the SEC was going to block the dividend: everything looked on track when I left. Mathew is fabricating this.
second time was because he wanted to escape the “reach of the Deep State.”)
Anyone else noticing that in the last two weeks the Party Line has been switching from “there is no Deep State” to, “there is a Deep State and thank God for it,” because (I think) they know they are about to be exposed. As Orwell wrote in 1984, ” Oceania was at war with Eastasia: Oceania had always been at war with Eastasia.” The shift began in the New York Times, and is now being regurgitated by a supine and obedient press corps. In any case, yes, escaping acts of retaliation from the Deep State for coming forward is in fact one of my reasons for getting myself and my wealth outside the USA.
Despite Byrne’s constantly changing narrative, Maybe it would make more sense for Mathew if he did not fabricate positions for me or simply regurgitate other journalists’ impressions within quote marks suggesting they were from me, as I above demonstrated that he has done repeatedly. Matt’s research is sloppy, and then he is surprised when the result looks “constantly changing”.
it may be of value to explore this latest explanation for his stock sale a little more deeply.
According to company insiders, Byrne was very close to many on his executive team. In a Washington Post article, a former Overstock board member noted that "Byrne relied heavily on an insular group of executives who referred to themselves as ‘coyotes’ and rarely challenged his view."
This could explain why he felt so betrayed when the board asked him to step down.
Actually, even if the claim above (“Byrne relied heavily on an insular group of executives who referred to themselves as ‘coyotes’ and rarely challenged his view”) were true (it isn’t: years ago when they were around, they challenged me heavily), the next sentence (“This could explain why he felt so betrayed when the board asked him to step down”) would be a non sequitur. Why would my reliance on one group of executives years ago make the board doing some other thing now feel like a betrayal….? It is logical gibberish.
Byrne noted his anguish in several tweets within the past few weeks. Mathew should probably have noted that the tweets below were in reply to people asking me questions about why I did what I did. It is not like I just sat sending out tweets in “anguish”: people asked me to explain, I explained.
Influenced by an old enemy
Byrne seems convinced that his long-time rival Marc Cohodes played a part in the Board’s decision to ask Byrne to resign.
If you can recall, Overstock sued Cohodes and his hedge fund, Rocker Partners, for allegedly conspiring a campaign against the company in order to depress its stock price in 2005. Back then, Cohodes was a vocal short seller against Overstock. After a four-year legal battle, Rocker settled for $5 million. Within Overstock’s press release, Byrne proudly called the moment “a triumph for the cause of cleaning up US capital markets.”
Fast-forward to 2017, Cohodes appeared to have a change of heart. The long time short-seller decided to long the company that had previously sued him. After visiting Byrne in Salt Lake City, Cohodes said that he had bought a “not small” stake in the company after developing a newfound friendship with Byrne as Bloomberg reported.
However, after a few missteps that caused Overstock’s share price to plummet, Cohodes started to demand Byrne’s resignation as CEO.
Although it’s uncertain whether Cohodes ultimately had any influence over the board’s attitudes towards Byrne, Byrne seems to believe it did. Actually, if you read below carefully, you will see that while I do describe Cohodes’ behavior is being stalker-like, my actual claim was that the Board was “inundated with calls from guys like Cohodes and many others…” So it is not precise to say that I attribute this to him. If anything, it was more of a group-think thing, and Cohodes was a member of the group. Again, this sloppiness is not the worst of Mathew’s errors, but by this point you are seeing what I am getting at: sloppy research, sloppy thinking, sloppy writing. And this is from a journalist who is reasonably good (significantly better than an average journalist, incidentally) and who writes for a place that charges $1,000/year for his “analysis”. That should tell you something about the state of journalism.
Despite Byrne’s numerous outspoken remarks on Twitter, however, the board has yet to comment on the situation.
Again, go to Twitter and grade Matt’s gibberish-sausage for yourself.