Manic Deception: Review of Sold Short by Manuel Asensio

Manic Deception: Sold
Short by Manuel Asensio

Sold Short: Uncovering Deception in the Markets. By Manuel Asensio with Jack Barth. John Wiley & Sons, 263 pages, $29.95.

If your life was on videotape wouldn't everything be all right,
When your head hurts the morning after you could roll it back to late last night.
You could replay all the good parts and cut out what you don't like.
Oh wouldn't you be in good shape if your life was on videotape.

--Steve Goodman

Sold Short is Manuel Asensio's life on videotape. But he's not content to simply replay the good parts and cut out what he doesn't like. When necessary to promote his carefully crafted image as fraudbuster, he feels free to splice in someone else's story. Or substitute some fraud of his own.

The deception begins early . . . in the acknowledgments, actually. Asensio pays tribute to the late Judy Stone, a physician who worked for one of his clients. But he describes her only as a "professional investor," making no mention of her affiliation with the Quilcap hedge fund. This allows him to acknowledge the analyses she prepared for him without the reader realizing what it means. It means that Asensio publishes clients' critiques about their problem short picks under his own name--presumably to create a veneer of independence. Which is about the last thing you'd expect from someone who professes a commitment to "uncovering deception."

Stone is not the only client about whom Asensio is less than forthcoming. Describing the early days of his career, he writes of a failed relationship with a company called Therapeutic Technologies. According to Asensio, he lost the client after sticking to his principles and recommending against an IPO to raise capital:

The reader is left believing that the court saga ended there. But it didn't. Once again, Asensio has simply cut out the part he didn't like: the client's successful appeal, which left him the loser. The final judgment reads:

Needless to say, Asensio's replay of his life's events includes no mention of the $250,000 jury verdict against him for defrauding and deceiving yet another client. No, rather than include any hint of the Norman Murphys in his closet, he instead serenades us with the vow of honor he claims to have taken in the wake of his battle with Therapeutic:

I drew the line, a line I didn't cross then and haven't crossed since: the thin line from investor to stock promoter.

The bright line between truth and lies is apparently another story.

The Spin Never Stops

After serving up a fairy tale version of his career before ACI, Asensio offers several chapters devoted to some of his better-known "picks." The story of each is replayed in excruciating detail . . . right down to the time of day that he issued particular commentaries. You'd think with this sort of attention to minutiae, Asensio would have included some of the major details--such as how his clients shorted some of these stocks first, then came to him when prices went up rather than down. Or how clients helped him write the script on several of the picks. Or the harassment that he visited upon some of his targets and their associates. But he says nothing about any of this . . . not a word about his hedge fund clients and his close working relationship with them. This is indeed strange for a man who admitted, under oath, that he, West Highland Capital, and Quilcap "worked closely together" . . . "on everything" related to his campaign against one of these companies.

Equally strange is how different Asensio sounds from the loose cannon who floods newswires with finger-pointing tirades. He is noticeably more restrained here. He acknowledges, for instance, that General Nutrition was not a fraud, but a company with real value. Similarly, he admits that Biovail did well after his attack--a far cry from the Asensio whose website blatantly deceives by showing the stock losing 48% of its value after his attack. It did not.

Obviously, his characteristic rhetoric and this more reasoned analysis cannot both be true. While perhaps intended to rehabilitate his image, the existence of two distinctly different voices leaves the impression that Asensio tailors his comments as he perceives necessary to achieve his ends. Again, hardly a reassuring picture for a man who claims zero tolerance for deception.

One of the biggest surprises in Sold Short is how little of the book focuses on the how-to of short-selling. There is but one brief chapter on the subject. Most, if not all, of its contents can probably be found on the Internet. This is bound to disappoint anyone expecting a book with novel advice on investing.

The chapter on short-selling was also Asensio's opportunity to tell it like it is on Wall Street. But he didn't. Rather than acknowledge the real abuses that go on every day among short-sellers, he writes as though all manipulation is done on the long side. This sort of hypocrisy reaches its peak in the final chapter. There, Asensio advocates "complete transparency of information," apparently oblivious to how he exempts himself and his clients from the concept.

The ultimate example of Asensio's inability to grasp that he is, at best, no holier than anyone else on Wall Street comes on the final page of the book. In his parting advice to the reader, he warns:

In other words, they may be just like him.

The book does have one saving grace: the writing talent of Jack Barth, Asensio's co-author. An immensely gifted storyteller, Barth turns the sanitized version of Asensio's career into a highly readable narrative. All we need now is a rewrite that tells something remotely resembling the truth about Asensio and his decades of deception on Wall Street.