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For starters, allow me to make full disclosure.
On Monday I sold puts on shares of Groupon as a reflection of a short term bullish sentiment on its shares.
Unless you've been living in a cave or have been on an South Pole expedition you know that Groupon is that beleaguered daily deal space leader that has had a rough time of things.
If either of those are the case, you probably also still own shares of Research in Motion.
Sometimes you are your own worst enemy and there are no better recent examples of that adage than Groupon and Research in Motion.
From its IPO, including pre-IPO and post-IPO behaviors its been an embarrassment every way you can imagine. Embarrassment is one thing, but for those that purchased IPO day traded shares at $26, the drop below $15 is more meaningful.
In the past, I've been critical of Groupon and its juvenile leadership and arrogance. If you really care. take a look.
If you're really without a reason for living, I suppose that you could check through the Twitter archives and read other miscellaneous comments that I'd made over the months, especially about CEO Andrew Mason, although he certainly wasn't the only culprit.
During that time, I'd never own shares, nor had any interest, long or short in the shares of this company.
On Monday, I finally decided to take a position, by selling those April 2012 puts.
I did so following Groupon's press release regarding yet another accounting issue.
In the past, I've done very well selling puts on companies after they've taken big hits, but not being terribly speculative or risk taking by nature, those positions have always been small.
In this case, if I am assigned shares, I'll be on the hook for about 0.28% of my portfolio.
Since Monday, other than mentioning the fact that I had taken the position, I've made no comments, derogatory or laudatory, regarding Groupon.
Not as if I actually would influence anyone by doing so.
Now on the other hand, we have Rakesh Agrwal, the self-proclaimed Twitter "Analyst focused on the intersection of local, social and mobile" and who further describes his activity as "I generally tweet about Groupon, the daily deals space, local, mobile and social startups, travel and life in the Bay Area."
He has been a fierce, persistent and vocal critic of Groupon.
I don't think that anyone could argue that it hasn't been justified.
About a month ago he had made a non-Groupon related comment on Twitter, something to the effect of "Sometimes the best thing I can do for a start-up is to say nothing."
That struck me as odd.
If you are an analyst, silence is an expression of subjectivity.
His response clarified his intent, as 140 spaces may make it difficult to get the story across.
What he inteneded to say was that for very young start-ups, in their infancy, it was best not to say anything derogatory, in order to give them a chance to get their systems up and running.
So at least you may not be justified in thing that Agrawal was an unmitigated sadist. But my interpretation of the tone was that delaying comment when no comment was yet warranted, just gave the start-up time to hang themselves.
Today came Agrawal's full disclosure that he had bought January 2013 puts on Groupon, which he further qualified by saying "Frankly, I doubt that I'll have to wait that long."
After a quick query from me regarding the timing of his put purchase, Agrawal indicated that he posted his Tweet about purchasing puts immediately after having done so.
He further commented that his purchase of puts must have come as news to those that thought that he had already done so, thereby indicating that this was the first time that he had taken any financial position on company's prospects.
Given his unrelenting attacks on Groupon, I wondered, and asked him whether it was appropriate for him to have done so. After all, he does portray himself as an objective critic.
The response was fascinating and to me, very much filled with both self-grandeur and delusion.
Agrawal: "The experts you see on CNBC and Bloomberg frequently have positions in the companies they talk about"
TheAcsMan: "Well understood, but are you an objective critic or out to influence market for personal gain?
Agrawal: "and certainly VCs all have positions in the companies they talk about."
TheAcsMan: "It's rare that I get inspiration for blog so early, but today, it will be "Full Disclosure" with special thanks to @rakeshlobster"
Agrawal: "the flip side of that is, i have made many people tell me "put your money where your mouth is".
Agrawal: "the trades are for fun. all immaterial to my personal financial situation."
Agrawal: "and are the standards different if you're long vs. short? i don't see why they should be."
TheAcsMan: "re: $GRPN puts. Mr. Nixon, so they were party tapes? RT @rakeshlobster trades are for fun. all immaterial to my personal financial situation"
Agrawal: "if this starts a wider discussion on conflicts of interest and economics of financial journalism, i'm all for it!"
Agrawal: " every time a company exec speaks, they have a conflict of interest."
TheAcsMan: "You portray yourself concurrently as insider VC, company exec etc" drawing parallels to justify actions. Analogy doesn't work"
Agrawal: "what doesn't work. Nearly everyone who talks publicly about companies has a conflict.
Agrawal: " the big difference is I'm being transparent."
Since I have a self-proclaimed deadline for this blog, I was done with my side of the debate.
It's probably coincidental that today's "T-Shirt Coffee mug combo featured the late Ted Forstmann and Virgin Music Festival."
No one ever had any doubt regarding Ted Forstmann's positions and motivations. His every word had a financial objective. But we all knew that. It wasn't transparency, it was just clear what his intentions were regarding companies that were on his radar screen. And no, I'm not an investing or financial news media Virgin. I understand the concept of where the bread and butter emanate as being potentially influential.
But the purpose was served. In fact, I don't think that I've ever gotten inspiration so early in the day, as I did this morning for the day's blog topic
In all, it started as a great day, so I'm hard-pressed to say that I was looking for something petty to argue about.
I went to the Maryland Department of Motor Vehicles this morning for a license renewal, having freshly removed my monkeytail.
Even though posted hours began at 8:30, the doors were open and they were already processing people.
Despite a full house, I was out of there in less than 20 minutes.
How could that not set the tone for an up day?
Despite the fact that the market was down by more than 150 points in the late morning, for full disclosure, I sold more Barclays VIX calls expiring this Friday.
For further full disclosure, I've gone on the record defending these Volatility Index products and have clearly demonstrated my transparency by documenting my concurrent long positions and sales of calls and puts.
I guess that may also document either my confusion or schizophrenia.
Yet, I have still enough coherence to be somewhat bothered by Agrawal having taken a position in the fate of Groupon.
If he is a Venture Capitalist, or if he is an Executive of a publicly traded company, that company is not Groupon.
Neither is it clear that he is such with any of Groupon's many competitors.
To the average person, it would appear that Agrawal is offering his comments as an objective analyst, whether he is renumerated for such activity or not. Just as a meaningful aside, it doesn't appear as if he is being retained to offer analysis about Groupon, but I could be wrong, or I may have missed that disclosure.
I suppose that if he helped to slide the pole and then sold puts that might be marginally ethical, as long as he stopped spouting negative comments to help fulfill the prophecy.
With my 0.28% on the line and with his trading for fun, there's not much material effect, presumably for either of us. But then there's the matter of everyone else that owns shares in Groupon, either as measures of faith in the company, by virtue of employment or just through good old fashioned speculation.
There's certainly nothing wrong with self-immolation if you're a publicly traded company, but I do think that there is something wrong, when you are in part, taken down by a war of words that belie a financial play.
Oh my God. Did Patrick Byrne ghost write that last paragraph?
I don't really consider myself terribly old fashioned. I believe in bending the Ten Commndments and revel in the Seven Deadly Sins. But something bothers me about appearances and feigned credibility.
For full disclosure, this blog was written in its entirety while I was holding my breath and violating two of the aforementioned Commandments.
Oh, and before I forget, for complete disclosure, yes, I did desecrate some graves, but that was before the price of gold dropped so precipitously.
|Recent Trades||Security||Type||Action||Type||April 4, 2012||VXX||Call||STO||Crumbs|
|April 3, 2012||VXX||Call||STO||Weekly|
|April 2, 2012||GRPN||Put||STO||Monthly|
|April 2, 2012||CHK||Call||STO||Weekly|
|April 2, 2012||XLE||Call||STO||Weekly|
|April 2, 2012||MS||Call||STO||Weekly|
|April 2, 2012||MS||Stock||Buy|
|March 31, 2012||FCX||Call||Expired||Weekly|
|March 31, 2012||BP||Call||Expired||Weekly|
|March 31, 2012||CHK||Put||Assigned||Weekly|
|March 31, 2012||FCX||Call||Assigned||Crumbs|
|March 31, 2012||VXX||Call||Expired||Crumbs|
|March 31, 2012||MOS||Call||Expired||Weekly|
|March 31, 2012||GMCR||Call||Expired||Weekly|
|March 31, 2012||VXX||Call||Expired||Weekly|
|March 30, 2012||JPM *||Call||STO||Weekly|
|March 30, 2012||JPM||Stock||Buy|
|March 30, 2012||HAL||Put||BTC||Weekly|
|March 30, 2012||VXX||Call||STO||Crumbs|
|March 30, 2012||FCX||Call||STO||Crumbs|
|March 29, 2012||VXX||Call||STO||Crumbs|