One look at Monster’s stock chart for the last 6 months and it’s obvious that some nice returns could have been generated by shorting MNST earlier this summer. Given what’s going on with the company, however, I’d make the case that it’s not too late to capitalize on Monster’s troubles.

A few years ago, I listened to a very successful short seller discuss what at the time was his current favorite stock to short. It was Nautilus (NYSE: NLS), maker of the BowFlex home-gym system. His investment theme was that when Bowflex started increasing their advertising, it was time to increase his short position. As is the case with most short strategies, his position required nerves of steel and tremendous conviction because the increase in BowFlex ads, as they seemingly became omnipresent on TV, absolutely increased unit sales. But through customer interviews, store interviews, and basic research, this investor realized that customer returns of the BowFlex system were very high, customer satisfaction was horrendous, and the unit sales rise did little to boost the company’s financial performance. Over the years, he played the stock’s ups and downs masterfully and generated incredible returns.

While I’m no investment professional, I think that the same philosophy applies to Monster these days. Customer satisfaction, from both jobseekers and HR professionals alike is abysmal, better alternatives are arriving in the space, and the company seems to be increasing its marketing, advertising, and ’strategic partner’ spending on a large scale. Based on the wave of spending that the company has made to strike deals with newspapers and other media companies all over the country, my guess is that the money spent, even required, to attract a new unique visitor to its site has grown tremendously over the past year or so. And while the increase in activity may generate some short-term rise in users, advertisers, resumes, and visibility, the activity will not improve the underlying condition of the business because Monster is doing little to improve its value proposition in the market.

The job board still suffers from too many 3rd party intermediary and garbage ads from headhunters, staffing firms and recruiters, too many annoying pop-up ads, an awful user-experience, and extremely weak results for users on both sides of the hiring equation. This week’s security breach and the ongoing issues with phishing expeditions and identity theft are par for the course with Monster. While one cannot look at ’store returns’ like one can with BowFlex, it’s clear that Monster’s customers are an extremely unhappy bunch. Their shareholders cannot be too happy either given not only the share price, but the options backdating issues that have plagued the company. Monster is struggling badly, and nothing they do on the marketing, advertising, and strategic alliance side of the business will change the deteriorating fundamentals of the business.

Tags: Monster, Phishing, Monster’s Security Problems, Identity Theft, Job Boards, Online Recruitment Advertising