That would be me. I think I do some things pretty well. I think I can communicate, verbally or in print, in a way to convey even complex subjects to a wide range of audiences. I think I am pretty good at ferreting out good claims from questionable claims. I have been told that I am a good debater. Business acumen, however, is not one of my strengths.
I have known this for a long time. The first time I bought a new vehicle (I was 19), the salesman asked how much I wanted for my trade-in. When I told him, he said “How about we give you $500 more than that?” A car salesman took pity on me. Of course he did so because he had just earned enough on that sale to put his kids through college.
It’s not that I have done badly with my investments, though. I have always invested the maximum contribution into my 401K, and I have put the maximum contribution into an IRA since I was 17. But I have failed to take advantage of many opportunities that could have comfortably made me a millionaire many times over.
The recent Xethanol story provides but a single example (and ties into the energy theme of my blog). The Sharesleuth.com exposé on Xethanol came out on August 7th:
However, I had advance knowledge of the story. Since I had been asked to comment on the story the previous week, I had several trading days in which to stake a position to take advantage of the fallout from the story. While I understand that there were no shares available to short, I could have sold call options and/or bought put options. So, what did I do? Nothing. I didn’t even seriously consider it. Of course I have to admit that the ethical implications are also bothersome to me, even if it doesn’t qualify as insider trading. I also hate taking advantage of people (which is one reason I am not a good business man).
When I had knowledge that the Sharesleuth story would come out, XNL was trading at $7.50. A few days after the story was published, it closed at $4.97. That is a very big percentage move for a few days work.
Right after the Sharesleuth story came out, Xethanol put out a press release in which they claimed to have addressed the allegations. I used one of my strengths to dissect the press release. I pulled out my BS detector and read through it carefully. It appeared to me that they had not addressed the allegations at all, but had merely danced around the issues. I documented my impressions in an update to my Xethanol article:
I concluded with:
So what did the news release actually address? None of the substantive issues. They didn’t address the fact that many people involved with Xethanol have been involved in shady behavior. They didn’t address any questions at all about the plant with no utilities. Their “response” was a complete sleight of hand.
On Thursday, a report from TheStreet.com came to a similar conclusion (exactly 1 week after I did):
Xethanol refused to arrange an interview that would have allowed corporate executives to present their side of the story. The company instead stood by an eight-paragraph press release that, while adamant in tone, fails to specifically address many issues in the long sharesleuth.com report.
The report also reinforces the findings of Sharesleuth, and adds a few findings of its own. Bottom line? Upside potential of XNL appears to be limited.
Oh well. At least this way I don’t have any ethical issues to be concerned about.