Arena Pharmaceuticals, Inc. (ARNA)

[ferretmoney]

What I find more curious is how Audit Integrity, using their forensic accounting model which they claim to be 72% accurate at predicting bankruptcy up to two years before the event by signaling "aggressive accounting," has Arena rated at 27, where low is bad and high is good! What? Arena is a bio R&D about to jump to being an adult pharma co, and I have never once heard any objection to their accounting methods. This looks like short crap to me.

As further evidence of the suspect nature of this list, Sequenom is ranked 8! Again, after a long past accounting scandal and the not yet forgotten T21 scandal that company has something to prove, but after the management housecleaning and obvious progress in the past year I don't see how they can be predicted to fail looking forward and I have heard no objection to their accounting methods since then.

What both companies share is a very large and angry short interest and a lot of analysts supporting the shorts with amazing timing of their hit pieces. A lot of the shorts seem to be funds that lost heavily in earlier bets on these companies and now their investment strategy seems to be driven by a need for revenge and vindication. That is, revenge gets their money back and if they can contribute to squeezing their enemies into failure by any yellow method then they are proven right in calling the companies losers.

I have utter contempt for the pump and dump scamsters that mostly use newsletters to snare less sophisticated investors, and I think these frauds should all be in prison, but I favor public evisceration for the short-selling fraud industry. I do not suggest that all shorts are frauds any more than all longs are frauds, just that the majority of major short players seem to have media in their pockets and use it effectively as a weapon, truth be damned. Media sometimes does a great service exposing genuine scams that should collapse, but I see mostly weaponized reporting and very little genuine investigative reporting.