By way of introduction I'm whats commonly referred to on wall street as a "shark". I specialize picking particularly ripe stocks that have had some misfortune of one kind or another, then I short. With any luck - nearly to oblivion.
On Friday the circus center ring was set. Fool as he is CEO Mark Ernst challenged Eliot Spitzer to see who had bigger balls. That was after Ernst made infamatory statements in the WSJ eariler that day. Naturally Spitzer's office couldn't let those words go without response so Spitzer (understandably) notched up the flame calling for "vast fines" among other things.
Now at this point, any company with reasonably intelligent leaders would be some what re conciliatory and apologize saying something stupid like "our comments were taken out of text" - you get the idea. Ernst of HRB however proved he thinks with his gonads rather than his brain when he had HRB issue a one liner in reply to Spitzer: "HRB stands behind our statement in the WSJ"
Now ask any Wall Street House down here - Folks you don't release a company statement challenging the AG's stones for the second time in one day.
Because of Mark Ernst stupidity, you saw it as well as I did - several shareholder rights law firms filed suit in various federal jurisdictions against HRB triggered by this latest round between Spitzer and Ernst. Clearly those firms were standing in the wings but needed more amunition for the official complaint to be filed. As soon as Ernst challenged Spitzer - thats all they needed. Two major suits in the news wires embodied this new fight in their complaints. Both seek millions.
Ernst is a stupid, conceited man. He will bring down HRB down as surely as Skillings, Fastow and Lay did Enron.
I was able to short a hefty amount of HRB but now I want to short more, since we have a real pissing contest going on here now. HRB is going out not just down!
As in the political world when the news is bad something positive has to be done to change the headlines.
H & R Block can do this by buying Jackson Hewitt and naming John Hewitt, who knows the tax business, to the post of CEO of H & R Block. Here is a leader that has a track record of building business and unlike Ernst who has destroyed a business.
The vision must change and it must start at the top first.