Short only fund within MM
People talk about LO a lot but haven’t really read much about a short only book. Anyone have any thoughts on career development or experience at a short only?
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I've been on a short only team. The guys I worked with there were (unsurprisingly) substantially better at shorting than anyone I've worked with in the L/S world. I've found it to be a very valuable skillset as shorting is almost always much more difficult and any L/S PM will place a higher value on an analyst who can generate good shorts. I also now find that some of my best long ideas come from initially approaching something as a potential short, only to realize it is definitely not a short...and in fact, a great long. I'd also consider that doing short only makes the most sense early on in your career to build the skillset...obviously, economics of the short only model are a lot tougher and it generally is not the best place to be if you are an older analyst who is trying to maximize comp.
What skillset made them stand out? Were they very good at catching short term inflections (-20% shorts over quarter) or picking out structural losers (-50% over a year). Better understanding industry dynamic ahead of the curve or accounting idiosyncratic (cost creeps, unrealized / non-GAAP builds)? Are there any good resources to better learn how to short?
shoot me a pm
Please can I PM you too?
How can a great long idea come from approaching the name as a potential short? How does that work?
Most shorts are generally well-publicised due to short interest disclosure and sometimes lead to over-selling that gives a good margin of safety to go long if it's a temporary headwind
I’m short focused (95% of my names) at a L/S. It’s important to make sure your temperament is suited to it and that your comp is structured to consider 1) higher turnover / smaller avg size of shorts 2) judged & paid on alpha vs PnL - otherwise you could be performing well in bull markets and not get paid, then in a bear market when your PnL is good - no fees. It’s VERY important your PM is alpha vs PnL oriented. Short side of traditional L/S is much more similar to MM workflow (trading oriented, timing/sizing importance) than the long book. I really enjoy it, it’s different tho
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