Short selling

[blacksheep]

An interesting, although little old (May 22, 2003) Presentation to the House Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises by David Rocker, Managing General Partner of hedge fund Rocker Partners LP - ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“The Long and Short of Hedge Funds:Effects of Strategies for Managing Market RiskÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ explain his view on...

 

short selling and the important role I believe it plays in creating more liquid, balanced and fair markets.

 

extract

 

Short sellers, through their research and public skepticism, provide a much

needed counterpoint to the bullish bias described above. They are willing to ask

tough questions of managements in meetings and on conference calls, thereby

providing a more balanced view for listeners. Investors benefit by getting both

sides of the story when the views of short sellers appear in the media.2

Short

sellers have helped uncover many frauds and accounting abuses in recent years

at Enron, TYCO, Conseco, AOL, Boston Chicken, Network Associates and

Lernout & Hauspie, among a host of others. Short sellers frequently serve as

unpaid, but self interested, detectives and have willingly shared their findings with

the SEC, which has acknowledged the usefulness of these inputs. Although

there have been occasional instances in which short sellers have been accused

of circulating misleading stories, these instances are dwarfed both in number and

magnitude by the misleading stories circulated by long holders and the issuers

themselves. Because of the greater risks in short selling, research done by short

sellers has tended to be more careful and accurate than most

 

As Gretchen Morgenson of The New York Times recently reported:

 

If you own shares in a company that declares war on short

sellers, there is only one thing to do: sell your stake. ThatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s

the message in a new study by Owen A. Lamont, associate

professor of finance at the University of ChicagoÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s graduate

school of businessÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦ The study, which covers 1977 to 2002,

shows not only that the stocks of companies who try to

thwart short sellers are generally overpriced, but also that

short sellers are often dead right

 

http://archives.financialservices.house.go...df/052203dr.pdf

[nipper]

Renaissance Technologies - by a country mile

 

https://www.bloomberg.com/news/articles/201...-s-blackest-box

[blacksheep]

The Big Board's 'Icky' Attack on Short-Sellers

By Stephen Gandel

 

https://www.bloomberg.com/gadfly/articles/2...s-not-investors

[blacksheep]

AUGUST 7, 2017 / 10:03 AM / A DAY AGO

ANALYSIS-As short sellers target Chinese companies in Hong Kong, hostility mounts

Reuters Staff

By Michelle Price

* Short-sell campaigns against HK-listed companies at record high

 

* Campaigns growing riskier amid Beijing's rising influence in HK

 

* Activists say they are monitored, hacked, intimidated, assaulted

 

* Hong Kong lawmakers call for further regulatory crackdown

 

https://af.reuters.com/article/africaTech/idAFL4N1K12I2

 

 

[blacksheep]

Interesting read re Iceberg Research and their 2 year long "short battle" with commodity trader, Noble, have, it appears, now been proven correct.

 

Noble's Giant Writedown Proves Iceberg Research Right After Two-Year Fight

By Andy Hoffman and David Yong

August 9, 2017, 8:21 PM GMT+10 August 10, 2017, 12:20 PM GMT+10

In early 2015, a previously unknown entity called Iceberg Research published a series of scathing reports attacking the accounting practices of Hong Kong commodity trader Noble Group Ltd.

 

Among IcebergÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s central accusations was that Noble had inflated the value of long-term commodity contracts and carried billions of dollars in profits on its books. The trading house would eventually be forced to write down the value of those gains, Iceberg said.

 

At the time, Noble dismissed the claims as the work of a disaffected ex-employee who was using the Iceberg handle to make anonymous attacks on his old company. Yet, more than two-and-a-half years later, Noble has done much of what Iceberg predicted.

 

Noble, due to report earnings later on Thursday, said in a statement in July that the company expects to post a second-quarter loss of as much as $1.8 billion including writedowns of up to $1.3 billion. The board concluded ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“that a more conservative balance sheet valuation should be implemented,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ it said.

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Iceberg has been proven completely correct here,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ said Carson Block, the U.S.-based short-seller and head of Muddy Waters LLC. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Our conclusion, at the time, was that we shouldnÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t trust management and we should short them. That has very clearly been vindicated.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ

 

For Iceberg, validation has taken a while. Initially slow to react, Noble fought back once the allegations began denting the traderÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s share price. The company sued Arnaud Vagner, a former employee and the man the company claimed was behind the research group. The lawsuit remains ongoing in Hong Kong.

 

The aggressive response did Noble little good. After investors started selling, the company was forced to pay increasingly nervous banks more to finance day-to-day operations. Today, NobleÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s shares trade more than 95 percent below their pre-Iceberg value, founder Richard Elman has been ousted as chairman and senior management replaced. The new board has put almost all NobleÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s businesses outside Asia up for sale.

 

https://www.bloomberg.com/news/articles/201...er-2-year-fight

[blacksheep]

Iceberg Research's latest - NOBLE GROUP IS SINKING. THIS SAGA REVEALS THE COMPLETE FAILURE OF THE REGULATORS IN SINGAPORE.

 

https://iceberg-research.com/2017/08/03/nob...s-in-singapore/

[blacksheep]

GI Partners bets on Amazon as it builds up short positions

 

VGI Partners, the Sydney and New York-based fund manager, has a reputation for picking the market's winners and losers. In its nine-year history, the fund has never had a larger share of short positions than it does now.

 

Luciano is sticking to his comments made earlier this year to the Financial Review that "winter is coming" for Australia's retailers as Amazon arrives.

He says VGI is finding a few "frauds" out there but they "might take a while to play out".

 

Any in Australia?

 

"Unlike the rest of the world, for a quarter of a century we haven't had a cleanout

."

 

Read more: http://www.afr.com/business/banking-and-fi...a#ixzz4pe2P9ucM

 

[nipper]

It's interesting, I take it this is a long on Amazon and a series of shorts on the 'likely disrupted'.

 

But mainly VGI is selling their book for the upcoming IPO. Raise a quick $3-400mill and that's marketing done.

[blacksheep]

That's right. Here is a bit more of the article, as appearing in this morning's The Age...

 

VGI Partners, the Sydney and New York-based fund manager, has a reputation for picking the market's winners and losers. In its nine-year history, the fund has never had a larger share of short positions than it does now.

 

Rob Luciano, founder of the $1.1 billion fund, says high market valuations, complacency among investors combined with the rise of "winner takes all" companies has created abundant opportunities for short sellers.

 

VGI had a concentrated portfolio of mainly global stocks. It has stakes in Amazon, Mastercard, Chicago exchange CME, online real-estate site Zillow, WD-40 and the Boston Beer Company.

 

VGI also has a large holding in ASX-listed Medibank.

 

One of VGI's larger holdings is Amazon, which has had a spectacular run as the market has switched its focus from its minuscule profits to its relentless and destructive quest for retail domination.

 

Amazon is a "multi-decade compounder" that is heading to $US2000 a share but Luciano says the ride will be wild.

 

"There will be some profound volatility in the share price in the years ahead," he says.

 

"It has no dividend yield, it's incorrectly perceived to be on an 'infinity multiple' and as a consequence it will be hit with bouts of panic.

 

Given VGI's short selling prowess, have they joined in betting on the demise of retailers at the hands of Amazon?

 

You bet. The fund has shorted a basket of local and international retailers.

 

"A great teaching of Charlie Munger is to invert, which we have done in the case of Amazon."

 

Luciano is sticking to his comments made earlier this year to the Financial Review that "winter is coming" for Australia's retailers as Amazon arrives.

 

"The beachhead has been taken and the tanks are rolling in. Just because they're a long distance away it doesn't mean they're not coming. They are here and it's going to profoundly change the Australian retail environment."

 

http://www.theage.com.au/business/markets-...813-gxvfgd.html

[nipper]

Reading

 

Jason Del Ray. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Amazon and Walmart are in an all-out price war that is terrifying AmericaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s biggest brands.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ Recode. March 30, 2017.

 

Neil Irwin. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“The Amazon-Walmart Showdown That Explains the Modern Economy.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ The New York Times. June 16, 2017.

 

Sarah Perez. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Amazon wants to become Walmart before Walmart can become Amazon.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ TechCrunch. June 16, 2017.

 

(but I'm off to Simpson Desert, Birdsville and beyond.... C U