Cohen's Analyst Recommends MOBI: Cohen's Funds Sell

Some interesting tidbits

15 March 2005

There is a regular poster to the Yahoo SCOX board whose nym is stats_for_all. Stats_for_all has continued to look into some of the players in the SCO story. In particular, he has occasionally shined his investigative skills on Jonathan Cohen. In particular, there was an interesting post from him today indicating that within a month and a few weeks of an MSNBC appearance touting MOBI as a good buy, the private and public funds run by Jonathan Cohen's management firm had sold over 120,000 shares of MOBI. This is in stark contrast to Cohen's actions toward SCO when an appearance by Cohen on CNBC during a critical time for SCO resulted in increased share price and continued holding by Cohen managed funds.

The detailed post by stats_for_all regarding the above is appended below, but I wanted to make a few quick pointers to some other interesting research regarding Cohen:

There are a number of other rather interesting posts regarding Jonathan Cohen that are currently unavailable from Yahoo! right now. I hope that when the SCO story is written by someone that this material gets a chapter or two.

The material listed below is copyright 2005 by Yahoo! poster stats_for_all

- This post #246134 from Yahoo! SCOXE had 25 recommendations when it was copied
When Actions != Words
by: stats_for_all
03/15/05 10:23 am
Msg: 246134 of 246242
On November 19, 2004 JHC Capital analyst Dana Serman appeared on the CNBC Stock Picks TV program. He gave buy recomendations for two stocks: DCLK and MOBI.

JHC Capital is the management firm owned by Jonathan H. Cohen. It manages the Royce Tech Value Fund (RYTVX). The mutual fund has $30MM assets and a parallel small private fund has $3MM assets.

As of Sept 2004, JHC owned 253,605 shares of MOBI divided between RYTVX (130K) and the private hedge that had 123,605. As of Dec. 31, 2004, JHC had sold 114,222 shares from its private hedge, and retained 9,383. JHC had sold 12,600 from RYTVX and retained 117,400. The liquidation may of produced $850K in working capital for the $3MM private hedge.

In short, JHC Capital was appearing on television on November 19 promoting investment in MOBI, but by Dec 31 had reduced its holdings in its private fund to minimal levels.

What provoked the JHC exit? Not reaching a price target, because MOBI was trading below October values. Not news, there are few SEC filings or headlines in the Nov-Dec period other than small planned sale Form 4's and a (proxy) Def14A issued Dec 28th. In fact, Y! reports no headlines between Nov. 8th and Jan 4th when MOBI lowered its 2nd Q outlook leading to a sell off.

There appears to be good circumstantial evidence that JHC may have already elected to sell MOBI when Serman appeared on TV promoting the stock. In this scenario, the public was given a misleading buy recommendation in order to build buy interest coordinate with the JHC sell off. The preceeding 10 trading days had seen volume averging 38K, so a >100K share sell off would of impacted the price in that anemic market.

Alternatively JHC could of had an abrupt change of heart between the 11/19/04 TV appearance and the end of year, provoking the exit. What would of catalysed that shift is unkown, since the missed earnings 8-K was not released until Jan 4, 2005. Perhaps JHC had prior knowledge of its contents?

The other stock promoted in the TV appearance, DCLK, was not in the Sept. 3Q 13F filing by JHC. By December 31, however, 126K shares worth $900MM had been accumulated, entirely held in the $3MM private hedge account. In other words, the private MOBI position had been neatly exchanged for the DCLK position virtually dollar for dollar.

The DCLK position was not funded by new hedge capital. Reported hedge holding were $3.8MM in September, falling to $3.0 MM in December. The erosion in hedge assets were partially offset by a profitable short-term position in CHNL. The JHC hedge had acquired 92K shares in CHNL from Royce Mutual funds in August at around $3 share, it sold in 4Q for perhaps $9 share, securing a possible $500K gain thanks to the very fortunate deal with its employer.

SCOXe watchers are interested in JHC because of the early, persistent and vocal position Jonathan Cohen took in support of the IP lawsuits. Dana Serman was credited by Cohen as the architect of the 2003 performance spike in RYTVX created primarily by the run-up in SCOXe values. Serman was Lazard-Freres tech analyst serving in the office of M$ acquisition VP (retired) Rich Emerson who is (presumed) mentioned in the Anderer Halloween memo as directing the M$ support deals.

To reiterate, JHC Capital made a public recommendation for MOBI which ran counter to its subsequently revealed actions.

Dana Serman interview reported at:


¹ 04 April 2005 This post is particularly interesting because the referenced 17 Dec 2004 stats_for_all Yahoo! post said, in part:

Brean Murray researches the software firm CDSS, also in the top 10 RYTVX portfolio (2.4% on 11/30/04).

Today CDSS is down 43% ($1.84) on lowered guidance and a Brean downgrade, released today. Volume picked up yesterday, just before the close.

So, oddly one of the stocks that Michael Perica and Jonathan Cohen both seemed to like was down considerably. This was followed later that same day with another post from stats_for_all indicating that the closing price for RYTVX only made sense if Cohen had been lucky enough to sell CDSS before the downgrades had tanked the shareprice

Well, it turns out that by the end of December, they had liquidated a 220,000 share holding in CDSS. That Jonathan sure knows how to time his trades.

See all the long boring stock discussions.

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