I couldn’t agree more with this NYTimes article on short seller transparency:
The questions were fairly innocuous and appeared to be probing the breakdown between distributors and the actual buyers of Herbalife products. Yet soon after Mr. Einhorn’s questions, the company’s shares tumbled. Investors were assuming he knew something and had placed a big short bet.
Mr. Einhorn, however, did not and has not disclosed whether his firm has any position whatsoever in the stock. Does that make sense . . .
→ Read More: NYTimes: Disclosure by Short-Sellers Would Improve Market Clarity
The following lecture by Kathryn Staley, author of The Art of Short Selling was passed along via twitter. She covers her start in short selling and the things she looks for in finding good short sale candidates. She also gives a number of great examples from her experience shorting.
One thing . . .
→ Read More: Video: The Art of Short Selling’s Kathryn Staley
Distressed Debt Investing published A Value Investor’s Take on Shorting that is a great read with details on three strategies for dealing with overvalued companies. The article’s mention of the fascinating Volkswagen short squeeze alone (which I had completely missed when it occurred!) was worth the price of admission.
While my thinking on this has changed over the past few years as an investor, I will never short a company on valuation alone. Unless there is a catalyst, . . .
→ Read More: Value Investing and Shorting