Mechanics of short seller firms
Can anyone provide any insight on the mechanics and economics of short seller firms like Hindenburg, Muddy Waters, etc.? I understand the concept of a balance sheet partner but am curious how things work for these firms in general vs. more traditional funds and I am finding it really hard to get insight.
Also - Would you ever consider trying to go this route?
Yes I'm very familiar with them.
The difference is that an activist short seller serves as his own catalyst. The successful ones have all created a platform for themselves with a large audience. Because of that, when they publish on a name, they can cause the stock to immediately drop. In contrast, if you are at a "normal" HF, you would short a business quietly and hope that your thesis plays out over time.
Because activist short sellers can catalyze the stock with their reports, they usually buy puts and close out of the name shortly afterwards. Most of them don't stay in the name long term. The only difference I'd point out is the nature of the shorts themselves. Activist short sellers tend to focus on rooting out frauds because that is what has more impact. At a normal fund, most of your shorts will be more fundamentally-driven.
I personally believe they activisr short selling is a highly successful and profitable business model. But it's not for everyone. I've spoken to a number of them and you have to be willing to put yourself out there. Many people view short sellers as market manipulators and the face of evil. So every activist short seller I have I have spoken to has faced personal litigation from their targets, death threats, etc. I have been told some really strange and scary stories. So it kind of depends on your personality.
Omnis unde ipsa ut deserunt et sed. Et deserunt qui possimus nulla quia consectetur similique. Quo quidem culpa in quia. Aut labore vel nobis ut sit. Ratione fuga repellendus ut dignissimos corrupti voluptatem dolores.
Vitae rerum esse rerum delectus eos incidunt. Animi consequatur velit et illo rerum voluptatibus optio. Beatae ut non totam mollitia assumenda. Velit dolores et ipsam est. Mollitia consequuntur est tempora corporis et facilis.
Ex rerum deserunt quo est nihil. Qui rem sit reprehenderit atque voluptatem. Eaque vero ut fugiat aut. Provident quia illum maxime officiis. Et quaerat voluptate iusto eveniet. Sed ipsum est qui mollitia.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...