Mr. Cohodes's testimony in the Overstock case provides new details of his fund's surprising demise in the market rout.
As we wrote in July, at the outset, the site struggled with managing quality in buying overstock, discounted products and maintaining customer service — as a quick Google search will show you that customers have not always been thrilled with the NoMoreRack experience.
Mr. Cohodes is not a party in the Overstock lawsuit and has had a longstanding adversarial relationship with the company, whose stock he bet against.
Mr. Cohodes, who worked at the hedge fund for 25 years, testified in the Overstock case because his firm had placed short bets on that Internet company's shares during the mid-2000s.
The case concerns allegations of illegal "naked" short selling, where the rules have been tightened several times over the past seven years.In 2007 Overstock sued 11 brokers, alleging that they had caused its share price to fall by helping their clients to naked-short the Utah-based retailer.
Most of its inventory is, in fact, overstock: excess inventory, older models, "what-were-they-thinking" color selections, etc.
In comparison, Overstock's O.Co rebranding was the first negotiated.Co purchase deal, for $350K ( Godaddy also owns the name X.Co, using it as a vanity link shortening service).
A quick Google search is all one needs to see that, in the beginning, the site struggled with being able to juggle working directly with retailers and wholesalers, manage quality in buying overstock, while maintaining quality customer service.
In the early days of game farming in South Africa, overstocking was a considerable concern, though the situation is improving with management experience and mechanisms for scaling up, such as conservancies.
