A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio.
Book Review: Sold Short
12-Jun-01 08:46 ET  [BRIEFING.COM - Robert V. Green]

Frequent visitors to message boards know that any one criticizing a  company can get labelled as a "short seller." In some people's minds, there is no lower appellation. But  most of that antagonism is misplaced. If you want a real glimpse into the mind of a major-league short  seller, you should read this book. The Book  

•  Sold Short   
•  by Manuel Asensio, with Jack Barth   
•  John Wiley & Sons   
•  $29.95  Asensio and Company  

Who is Manuel Asensio?  

He is the founder and Chairman of Asensio, Inc., an investment company in New York. Asensio and  Company specializes in short selling. Mr. Manuel Asensio explains part of his focus on short selling as a result of  his own style of focusing on fundamental investing, got into short selling because "we were fundamental  analysts copying with a raging bull market." When there is nothing worth buying, it only stands to reason,  selling must be a good thing.   

And while Asensio and Company found a niche in short selling, they did not base their premises on  overvaluation due to market exuberance. They went looking for outright deception.   

Short Selling Premise  

Most people assume that short sellers actually want to destroy a company.   

But the truth is that short sellers are only the opposite of value investors. Value investors search for places  where the market has failed to place the proper value on a company. Short sellers search for places where  the market has placed value where there is none.   

Both the short seller and the value investor want the same thing: for the market to come to its senses.   

But Manuel Asensio's short selling prowess is aimed at inept management or outright fraudulent management.  They don't wait for market trends to reverse themselves, or for the market to return to a reasonable  valuation.

As Manuel Asensio states in most of the company's research reports, short sell recommendations are made when  "overvaluation exists as a result of the dissemination of incomplete, inaccurate or false information, or the  failure to disclose material negative information." Pure "irrational exuberance" is not cause for shorting,  in Asensio's approach.   

Searching Out Mismanagement, Deception, and Fraud  

Where Manuel Asensio has made its mark over the past five years is searching out mismanagement, deceptive  management, and fraudulent management. When the extensive due diligence uncovers a situation where  Manuel Asensio feels that their is "incomplete, inaccurate, or false" information, he shorts the stock.   

By taking a short position, and publishing the results of its own due diligence. Manuel Asensio profits, as the rest  of the world comes to the same same realization that he has.   

All of the Asensio and Company research reports are available, without charge, at the web site, at  www.asensio.com  

The Proper Reaction   

It never fails when you read a message board entry about Mr. Manuel Asensio: impassioned holders of stocks on  the Asensio short list are enraged. Just check out the Yahoo Finance boards. Try the Verisign board, for  the most recent short position.   

The "proper reaction," in our view, if you own a stock that appears on Mr. Manuel Asensio's list, is to start  reading his reports. Judging from Mr. Manuel Asensio's track record, there is usually something at the core of his  reports.   

Book Structure  

The book is designed around stories about actual shorts made by the company, including the details on  how the company was uncovered, how the "deception" or "misinformation" was learned, and what  happened to Asensio's short positions. Some of the companies discussed include:  

•  Diana Corporation 1996   
•  General Nutrition (GNC) 1995   
•  Solv-Ex (SOLVQ ) 1997   
•  Chromatic Color Sciences (CCI ) 1998   
•  Avant! ( AVNT) 1997-98   
•  Network Solutions (NSOL) 1999  

Each of these stories is presented in fascinating detail, with a fuller level of explanation than you find  almost anywhere else. If you are a student of the market, the stories behind these companies are  practically required reading. Of particular interest is both the Avant! story and the Network Solutions  story. Manuel Asensio focused on the "theft" of software by the founders of Avant!, while the rest of the world  virtually ignored it. Avant! founders recently settled this case with an admission of guilt. Also of interest  is the story of how Network Solutions lost the monopoly on domain name assignment, and the spin the  company put on the sequence of developments in ICANN. No matter what you think of short sellers,  these are fascinating stories.  

An interesting adjunct to the book are the actual reports, published at the time of the short positions, at Manuel Asensio's web site. The book gives a much fuller explanation of the thought process behind the short  position and "deceptive" practices, as seen by Manuel Asensio. After reading the stories of each company in the  book, go to the web site and read the archived research reports.   

Best Parts  

"Sold Short" should really be seen as a primer on two basic topics:  

•  Selling short: the mechanics   
•  Stock promotion: how "stories" are sold on Wall Street.   

If you want to learn about the mechanics of short selling, you will find only one chapter on the topic. It is  one of the best, shortest description of selling short that we have seen. But this isn't a book on how to sell  short based on overvaluation, which is the approach most individual investors take.   The real value of "Sold Short" comes from the stories about the companies, and how management tried to  promote their stocks. More than learning about how short sellers operate, you can great a great,  inexpensive education, about how stocks are promoted.   

What Is Missing  

The greatest shorting possibility of all time just occurred in the year 2000. Nearly $2 trillion of misplaced  market capitalization vanished.   

For anyone who shorted overvaluation, the year 2000 was a great year. Briefing.com readers who  followed our assessments of overvaluation in Red Hat, Excite@Home, and Priceline, to name just a few  we hammered on valuation, with short sales, know how lucrative the short side was.   

Short selling based on overvaluation is extremely risky, however, because it is fundamentally based on  the idea that rationality will return. Only the most patient short seller in 1997 was able to ride out the long  hiatus that rationality took in 1998 and 1999. Nevertheless, rationality usually does return.   

Some Complaints  

While we highly recommend this book, as a great primer on the darker side of Wall Street, there are a  couple of points you should know in advance before shelling out $30.   

First of all, an entire chapter is devoted to Mr. Asensio's biography, complete with a long story about how  Mr. Manuel Asensio's learned firsthand of the accomplishments of his great-grandfather, a Cuban hero of the  1870's. Although somewhat interesting, it has virtually nothing to do with the main topic of the book. But  the rest of the book makes up for this indulgence on Mr. Manuel Asensio's part.   

Another complaint about the book is Mr. Manuel Asensio's own numerous strong complaints about the  requirements and rules surrounding short selling, including the requirement that shares actually be  borrowed before short selling. We found this a little misguided.   

Without the requirement to sell borrowed shares, short selling could become overextended. The  creditability of the buying process, from the buyer's perspective, would be severely eroded. After all, if shares could be shorted without being borrowed, it means that buyers would not be buying shares at all.  They might be buying the "promise" of shares later. Mr. Manuel Asensio is sharply articulate about the markets  ability to serve as a source of capital, to the good of society. But allowing buyers to purchase "promises"  would greatly weaken the market's ability to generate capital.   

Short Selling  

Wall Street has always had its fair share of "shady" characters. While most investors think of "short  sellers" as part of that dubious crowd, Mr. Manuel Asensio makes a strong case for short sellers being the  "policemen" of the market's shady characters. Without short sellers, no one would provide a check on  stock prices.   

Whether you agree with Mr. Manuel Asensio's view of short sellers as heroic free-market policemen or not, you  can find value in his book. The extremely well documented scandalous behavior by numerous companies  in this book is practically required reading. Nearly every story in here is relevant to all investors.   

The years between 1996 and 2001 were filled with "concept" stocks. While not all runups of stocks with  dubious business models were the result of unethical management or investment bankers, if every  investor in the late 1990s had been experienced with "hollow runups," as documented in this book, we  might not have had the bubble that we had.   

From that perspective, you will find Mr. Manuel Asensio's book rewarding.   

But we do wonder if Mr. Manuel Asensio would mind if Amazon.com "borrowed" a few copies of his book to sell  to you.   

Comments may be emailed to the author, Robert V. Green, at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it   
 
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Press quotes

Asensio's zest for battle really sets him apart.

Brett Nelson. Forbes
A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio
 
A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio.
A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio.
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A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio. A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio.
A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio. A closer look at Manuel Asensio biography, Manuel Asensio positive outcomes, Manuel Asensio Reports, Manuel Asensio Research Legacy and other related information to Manuel Asensio.