Summary

People change their minds about stocks and CEOs all the time. But I am deeply troubled by the way a retired money manager named Marc Cohodes, who once was sued by Overstock.com, has morphed into a shrill advocate of the company. He also has become a tireless shill for its CEO, Patrick Byrne, a con artist who has cooked the books, attacked the press and stalked critics.

His sudden conversion has been written up in Bloomberg and Barron’s, but with all due respect to the fine journalists who wrote those articles, they did not tell the full story.

What these articles did not point out was that Byrne has done Cohodes a really big favor in return for becoming both a shareholder and a lapdog—a favor so significant that I believe that it may be construed as compensation:

In recent months, every disparaging reference to Cohodes has been removed from posts that had previously attacked him on Deep Capture, a fake news site Byrne created in 2007 to harass, stalk and smear critics, short-sellers and the media.

It is true that the Deep Capture site was discredited by the forgery conviction of the one of the founders and longtime operators of the site, Byrne aide Judd Bagley, and by a devastating 2016 libel verdict which excoriated Byrne and found that the truth “was of no consequence” to him and Deep Capture. However, despite this, I have no doubt that removal of his name was worth a great deal to the hypersensitive, egotistical Cohodes.

According to Bloomberg, Cohodes commenced his stock positions in Overstock in May 2017 and added to them after meeting with Byrne a month later. He Barron’s at a Grant’s conference on Oct. 10, giving an enthusiastic promotion of the stock, which immediately staged a run-up, aided by Cohodes’ intense hype and resulting publicity.

After buying the stock, Cohodes lavished praise on Byrne at the Grant’s conference saying “I admire him” and through his Twitter feed, despite his history of atrocious behavior (detailed below).

After taking his Overstock position, Cohodes also engaged in a vigorous behind-the-scenes effort to pressure critics to stop criticizing Byrne on Twitter. He has made phone calls and sent emails and text messages to various parties, myself included, recently telling me to “lay off Byrne.”

I could not do so in good conscience because Byrne has never retracted a single one of his lies. In addition, Byrne has never apologized to me for his vicious attacks against me in retaliation for the accounting shenanigans that I cooked the books, that he denied, and in which I was vindicated—Overstock was forced to restate its financial reports.

Cohodes has never provided any facts to support his view that Byrne has changed in any way whatsoever—that his character had improved, that he is no longer dishonest, no longer ready to cook the books if it suited his purposes, no longer willing to stalk and smear critics. In fact, by word and deed, Byrne has reiterated that he stands by everything he has said and done.

Nevertheless, Cohodes has been insistent, constantly nagging me directly and through third parties. He even made up out of thin air a personal history between us that never existed, to support his claim that I owed him an obligation to shut up about Byrne. It was strange and creepy, it was childish, and it made no sense.

It is still strange and creepy, but now it is starting to make sense.

How Byrne Expunged Cohodes From Deep Capture

A comparison of Deep Capture posts as they currently appear, vs. recordings of their past appearance on the Wayback Machine, shows how Cohodes was edited out of disparaging posts on the website. Those posts were not removed and were not edited in any other way. The conspiracies and attacks on journalists remain on the site to this day, but with Cohodes no longer mentioned.

For instance, an attack on the integrity of journalist Bethany McLean, “Fortune Magazine Stonewalls Exposure of Bethany McLean Perfidy,” looked like this as recently as Sept. 29, 2017, according to the Wayback Machine (click on image below to enlarge):