Shorting on valuation alone is a risky business. Nine times out of ten, the analysis is sound, it’s clear the company in question is overvalued and should be due for a re-rating. However, it’s often difficult to maintain the short position for the required period as there’s no telling how long market exuberance can last.
How successful are short selling campaigns?
A recent article by Alon Bochman of investment firm, Stepwise Capital provides a real insight into how successful different types of short selling campaigns are. The article looked at the different performance of shorts based on valuation, compared to shorts based on suspected fraud. The article uses data from a new research service called Activist Shorts Research, which has compiled data on more than 400 short campaigns from 2002 to present…..see more at http://www.valuewalk.com/2015/01/careful-short/