Shia LeBoeuf vs the short-sellers

By Felix Salmon
March 26, 2010
Shia LeBoeuf, momentum trader:

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May I present to you Shia LeBoeuf, momentum trader:

After preparing for his turn as a hedge-fund trader by visiting trading floors of small brokerage houses, LaBeouf in the April issue of GQ talked up the stock of an oil and natural gas exploration company that has yet to produce any of either.

“IOC’s momentum is major, and it will surprise to the upside,” LaBeouf said in a text message to the GQ article’s author, Adam Sachs, using the trader lingo he apparently picked up while prepping for the film.

IOC has been a darling of the short-seller crowd for a long time now: in June 2009 I received but did not open a letter from one such short-seller puporting to contain a Markopolos-style lay-down proof that the company is a fraud. It’s a copy of a letter which was sent to the SEC, and the short-seller in question wanted third-party confirmation that he had sent the letter and knew what was going on at a certain date.

IOC was trading in the 30s at the time; it has more than doubled since then, and at the beginning of this year, when I reckon LeBoeuf sent his text message, it was trading in the low 80s. That’s a really painful short squeeze.

Personally I have not spent much time looking into IOC. But the short side of the trade is represented by some very smart money indeed, while the long side seems to be represented by Shia LeBoeuf and other momentum traders making a lot of money squeezing those shorts. In finance, of course, nobody much cares if you’re right: they only care if you’re profitable. But I can only imagine what the shorts said when they found out yesterday that their investors’ money had been transferred into the pockets of a Hollywood pretty-boy.

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