Boots Asensio's Brokerage
(click for details)
Doctored Track Record?
In the fall of 2000, Asensio found himself in hot water with securities regulators. According to the NASD, his website had been using a variety of deceptive tactics to inflate his track record. Asensio accepted a censure and fine of $75,000 to settle these and other charges. Alas, the experience does not seem to have deterred him from spinning a few more yarns about his investing prowess.
His website recently added a chart entitled Activist Shorts. According to his description, it shows:
The chart says that Asensio recommended PolyMedica (PLMD) for short-sale in July 2001, at a price of $39.90. However, his list of published reports shows otherwise. Asensio did not issue a formal opinion on the company until October, 2001, when it traded at less than $17.
PLMD has more than doubled since then--and declared a dividend.
Obviously, these are not numbers that make Asensio look good. Which perhaps
has something to do with his failure to use them.
Other stocks have also posted gains after being attacked by Asensio.
But you would never know it from his chart. Although he claims that the
chart provides the "subsequent stock price after varying periods" for his picks,
there is a catch. Subsequent price has been surreptitiously
redefined to exclude increases in selling price. Which all but insures
that Asensio will appear infallible.
Biovail has split several times since 1996. Asensio appears to have used a pre-split value for the initial
price and an inaccurate post-split value for the subsequent price. This
creates the appearance of a far larger decline than actually occurred. Corrected
values compiled by this site take all splits into account.
initial price adjusted to reflect date when first research report was actually issued
Asensio's ruse also conceals the risk
taken by those who shorted these stocks. If unable to accommodate margin demands
created by rising prices, they may have incurred considerable losses.
In fact, within months of Asensio's attack on Hemispherx, the stock surged in
price, causing one Asensio client with a large short
position to lose about $3 million in a single month.
For evaluating performance, the "subsequent price" approach is misleading even if highest prices are included. The primary reason is obvious: Asensio (or anyone) may have covered long before the most extreme price was reached. It's the price paid to cover that really matters when calculating return on a short pick. Asensio does not provide it.
Another problem with this approach is that it fails to consider the time
factor. How long it took to achieve a particular change in price greatly
Obviously, Asensio selectively presents facts (and sometimes fabrications) designed to put him in the best light. No doubt this allows him to impress those who do not see through such tactics.
much more impressive it would be if he would tell us the
whole story of his short picks--and career. Warts and all.
Page Created 5/03/03