Famed short seller and mentor Marc Cohodes got into a Twitter war of words with David Sacks, a tech investor, podcaster and co-founder of the venture fund Craft Ventures, over how much Sacks allegedly profited in the recent collapse of Silicon Valley Bank.
A prevailing theory is that some venture capitalists including Sacks “pulled out” before the SVB collapse and then “incited” panic on recent bank runs, ER Velasco wrote on the stock analysis platform The Deep Dive.
The online feud erupted between Cohodes and Sacks amid the chaos of banks collapsing into the hands of regulators, leaving depositors wondering if they’d ever recover their investments.
Silicon Valley Bank, Silvergate Bank, Signature Bank, First Republic Bank, and Credit Suisse have fallen one by one depositors made a run on the banks, leaving them without liquidity. Regulators and Wall Street firms quickly rescued the collapsing banks in hopes of infusing capital through acquisitions or auctions.
Sacks was described by L.A. Times columnist Doyle McManus as one of the “Silicon Valley libertarians who spent years demanding that government get out of the way,” only to beg the Federal Reserve to save them.
On March 10, the day Silicon Valley Bank failed, Sacks called for the bank to be bailed out. “Where is Powell? Where is Yellen? Stop this crisis NOW. Announce that all depositors will be safe. Place SVB with a Top 4 bank. Do this before Monday open or there will be contagion and the crisis will spread” Sacks tweeted.
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Cohodes, who warned investors to stay away from FTX and later Silvergate, suggested to his 161,100 followers that Sacks was allegedly tipped off so he could pull out his VC firm’s money from Silicon Valley Bank before the bank collapsed.
Made famous in the movie “The Big Short,” Cohodes is one of the most popular short sellers in the game, according to Macro Ops, an investment research community for traders and investors. He’s spent decades exposing — and profiting tremendously — from failing business models and fraudulent management teams
Cohodes wants to know how much Sacks pulled out before the bank fell and accused him of being “a hypocrite who should be looked into … seems like he was tipped then begged fir a Bailout..”
SVB partnered with nearly half of all venture-backed U.S. tech and healthcare companies. Selling part of its US Treasuries portfolio at a loss to cover a run on the bank led to a sharp selloff in other U.S. bank stocks and global markets sank.
Sacks continued to freak out as news of the bank collapse unfolded, hurling insults at Cohodes for suggesting his behavior was questionable.
In a tweet, Cohodes questioned Sacks for what he described as picking a fight with him, telling his : “Now that SVB is done @DavidSacks is starting to realize that 1) His Portfolio is Toast 2) He cant Rug Pull Joe Six Pack anymore with worthless Coins 3) Will have to answer all sorts of questions about SVB so what does he do? Picks a fight with me.. Just Brilliant.”
Macro Ops outlined five tactics Marc Cohodes uses to find new short ideas. Tactic No. 4, called Fight or Flight, sheds some insight into how Cohodes responds to people who fight with him when he criticizes them.
When a CEO picks fights with a short seller, “That is always a terrible sign,” Cohodes said. “CEOs should run their business, understand what the skeptics are saying, and execute. CEOs who focus on the shorts often get distracted and fail.”