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jerryking : short_selling   13

Store wars: short sellers expect more pain in US retail
February 26, 2019 | Financial Times | by Alistair Gray in New York.

Short sellers who made big bets against US retailers a couple of years ago had hoped for carnage across the board. No one could compete with the rise and rise of Amazon...which would make life hard for every mall tenant across America.

But after a period in which internet shopping seemed to hit almost every brick-and-mortar retailer, the industry seems to be dividing into winners and losers. Casualties are still piling up: bankruptcies since the turn of the year....Payless Shoes ....Sears, the once dominant department store chain, narrowly avoided outright liquidation.

However, some of the biggest companies e.g. Walmart & Best Buy are reporting their healthiest metrics in years......For short sellers trying to profit from falling share prices, it makes for a perilous environment.

“It’s a slow death by a thousand paper cuts, and not the kind of ‘mall-mageddon’ originally anticipated by that trade,”.....“Retail has been much more volatile than many would have expected. It hasn’t been decidedly one way down.” over-reaction in 2017 and that led to pretty nice opportunities [for longs] in 2018,”.....Investors who put money on the demise of retail that summer have lost out in many cases......It was almost as if they [shorts] were acting like no retail real estate space can work,” ....overcapacity doesn’t mean retail real estate is dead.”...Shares in the sector have been volatile in part because investors have had to consider a series of seemingly contradictory data points about the health of both the US consumer and the retail business.....Traditional chains are also trying to take on Amazon by improving their online offerings and making their stores more enticing. Both require hefty investment, although successful examples include Lululemon, which offers yoga lessons in its stores. Shares in the company have tripled since a 2017 low.

“Those who are innovating and investing in ecommerce, marketing and social media tend to be doing well...“The US is still over-stored,” ...Ecommerce meant “more of the store base is not economic. That’s going be a secular pressure for years to come. For those retailers that don’t have a digital strategy, it’s just a matter of time before they fall.”
Amazon  apocalypses  bankruptcies  barbell_effect  bear_markets  bricks-and-mortar  commercial_real_estate  death_by_a_thousand_cuts  department_stores  digital_strategies  e-commerce  innovation  investors  investment_thesis  Lululemon  pain_points  overcapacity  retailers  shopping_malls  short_selling  structural_decline  Wal-Mart 
february 2019 by jerryking
The Lessons for Finance in the GE Capital Retreat -

More than 10 years ago, the kinds of investors who seek out weak companies were circulating presentations on Wall Street that argued that General Electric’s enormous lending business was a ticking time bomb.

The financial crisis of 2008 proved those skeptics right, and on Friday, they appeared to have the final laugh. General Electric announced that it was selling most of the loans inside its financial division, GE Capital, leaving a G.E. that will be dominated by industrial businesses.
GE_Capital  GE  exits  financial_services  short_selling  weaknesses 
april 2015 by jerryking
The long-term benefits of short-term investing - The Globe and Mail
Aug. 27 2013 | The Globe and Mail | FINN POSCHMANN

Markets, in the near term or long, work in the interests of shareholders – so long as they are unfettered by overseers who bet otherwise.

In this sense, short-term investors offer a great example of how markets are supposed to work. And this understanding explains the fact that the share price of rivals typically goes down when a firm in their sector is targeted and why, even if leverage goes up after a buyout, so too does productivity.
private_equity  hedge_funds  myths  short_selling  long-term  short-term  investors 
october 2013 by jerryking
The man who's selling us short
27 Apr 2013 | The Globe & Mail B.4 |Sean Silcoff.

Meet the 36-year-old fund manager who is wagering big money on big trouble for the Canadian economy

Vijai Mohan has made an all-in bet against C...
hedge_funds  Canada  housing  short_selling  the_big_picture  detail_oriented 
april 2013 by jerryking
Fooling some of the people all of the time : a long short story
Fooling some of the people all of the time : a long short story
by Einhorn, David. Year/Format: 2008, 332.62097 EIN
In 2002, Einhorn spoke publicly about Allied Capital--a leader in the
private finance industry--presenting it as an excellent short
opportunity. Einhorn describes the incredible events that followed his
speech and how Allied and the investment community attacked him to
protect the company--and its stock price. Informative and intriguing,
"Fooling Some of the People All of the Time" details how the current
environment on Wall Street--and the world of hedge funds in particular--
not only allows for such behavior, but how it protects the companies
and attacks those who attempt to uncover them.
David_Einhorn  short_selling  TPL  books  investing  investment_advice  investment_research  Wall_Street  hedge_funds  stockmarkets 
march 2011 by jerryking
Bill Ackman's Soft Power
February 10, 2011 | BusinessWeek | By Devin Leonard. The
hedge fund manager is an open, friendly, talkative guy who makes a lot
of companies—MBIA, Target, etc.—miserable
William_Ackman  short_selling  hedge_funds  shareholder_activism  personal_chemistry 
february 2011 by jerryking
Don't Shoot the Speculators -
JULY 14, 2009 | Wall Street Journal | L. GORDON CROVITZ. They predict prices, not set them.
L._Gordon_Crovtiz  short_selling  speculation 
august 2010 by jerryking
Learning to Love Hedge Funds -
JUNE 12, 2010 | Wall Street Journal | By SEBASTIAN MALLABY.
Mr. Jones's hedge fund, like most later hedge funds, embraced four
features. To begin with, there was a performance fee. Mr. Jones's
second distinguishing feature was a conscious avoidance of regulation.
Thirdly, Mr. Jones embraced short selling. By insulating his fund from
market swings, Mr. Jones cleared the way for his fourth distinctive
practice, which was later to become the most controversial one. Because
he had hedged out market risk, he felt free to embrace more
stock-specific risk, and so he magnified, or "leveraged," his bets with
borrowed money.
hedge_funds  financial_history  scuttlebutt  short_selling  Wall_Street  market_risk 
june 2010 by jerryking
The Short Game
March 16, 2010 | | The American Prospect | Tim Fernholz
Michael_Lewis  short_selling 
may 2010 by jerryking
The Misguided Attack on Derivatives -
APRIL 26, 2010 | Wall Street Journal | By L. GORDON CROVITZ.
Short-selling warns markets that an asset bubble is about to burst.
Easy money, easy mortgages, and banks too big to fail were key causes of
the credit crisis. It was also Wall Street's greatest information
failure in many years. We need more trading, not less, and more signals
in the market faster that prices need to be adjusted. The last thing we
need is outlawing opportunities for people like Mr. Paulson to bring
vital information to market.
derivatives  L._Gordon_Crovtiz  John_Paulson  information_gaps  signals  information_flows  too_big_to_fail  short_selling  bubbles 
april 2010 by jerryking
Review: The Big Short: Inside the Doomsday Machines, by Michael Lewis
Apr. 03, 2010 | The Globe and Mail | by Boyd Erman. The Big
Short: Inside the Doomsday Machines, by Michael Lewis, Norton, 264
pages, $35
Boyd_Erman  Michael_Lewis  book_reviews  Wall_Street  short_selling  hedge_funds 
april 2010 by jerryking The long and short of investing: Boring pays better
Saturday, April 21, 2007 | The Globe & Mail pg. B7 |AVNER MANDELMAN

Rules for selling short, although he points out that short selling as a business activity is inferior to going long
investing  Avner_Mandelman  short_selling  unglamorous  boring 
march 2009 by jerryking
Information Haves and Have-Nots -
Sept. 22, 2008 | Wall Street Journal | by L. Gordon Crovitz.
Piece on the ramifications of not having access to good information has
had on pricing securities. No one asks the right questions as research
analysts desert Wall Street.
...The credit crunch can be reduced to a single word. Not "greed," which also exists in stable markets. The word is "information," the absence of which has put taxpayers on the hook for billions, ruined Bear Stearns and Lehman Brothers, and led to the fire sale of Merrill Lynch and AIG. The continuing absence of information about the true value of underlying securities means no one knows when the market has hit a new normal for the important purpose of rebuilding.

Why did so many smart people at so many top firms make dodgy investments? Why were there so many unknown unknowns, now at least becoming known unknowns? One explanation is the absence of warnings from research analysts. For decades, the large Wall Street brokerages had armies of analysts who, when they did their jobs right, asked the hard questions and issued tough reports that often alerted both company executives and public investors to market-moving issues.

There are now about half as many Wall Street analysts as in 2000......."Research analysts have gone the way of high-button shoes and buggy whips." Alas, unknown risks have not. The now-former senior executives at Bear Stearns, Lehman and Merrill must wish they had been able to retain all their star banking analysts. Those analysts just might have waved enough red flags -- in public or even in the hallways of the banks themselves -- to alert management to risks in their portfolios......a few of those analysts left these Wall Street firms for the "buy side," such as hedge funds, which keep their research proprietary, for their own trading. Predictably, it was well-informed short sellers at these firms who first alerted the market to the true value of credit derivatives and other mispriced instruments by driving down shares of firms such as Lehman.

At a time when real understanding is at a premium, we're increasingly in a world of information haves and have-nots......A corollary is that proprietary information will be more valuable than ever, giving well-informed traders an even bigger edge.

What's the solution? The temporary ban on short selling of financial firms will have the unintended effect of worsening the information gap. Professionals will perform the equivalent of short selling through nontransparent instruments and markets, leaving individual investors to be guided by public share prices that no longer reflect all known information......Part of the answer came in news earlier this month that Credit Suisse will make macroeconomic research from its analysts available to noninvestor clients of Gerson Lehrman Group, a powerful force in the world of independent research such as for hedge funds. Equity researchers from Credit Suisse joined the some 200,000 expert consultants that Gerson Lehrman has attracted to its network.......Clients of Gerson Lehrman pay hefty fees to tap this deep knowledge through one-on-one phone calls and meetings. Serving these clients will help Credit Suisse fund its 700-person research department.

When Gerson Lehrman launched a decade ago, it was to serve the deep information needs of investors in highly technical areas such as health and biotechnology. As Wall Street analysts began to leave the scene, it brought on experts in virtually every industry globally, with 150 research managers to help clients conduct more than 10,000 consultations monthly. These are often on arcane topics, such as the likely growth in salmon farming in Norway, or the odds of success for a particular drug trial. Perhaps some research was even done on, say, the proper pricing of derivatives.

Regulators can try to put genies back in bottles, but complex financial instruments that, when properly used, create value will only become more commonplace. Innovation will also be required for better-informed markets. By recruiting a huge number of experts and using online social-media tools to connect them to clients, firms like Gerson Lehrman can bring information, knowledge and insights to the people who most value and need it.
arcane  asking_the_right_questions  buy_side  equity_research  expert_networks  financial_instruments  Gerson_Lehrman  hedge_funds  information  information_gaps  information-poor  information-rich  L._Gordon_Crovtiz  market_intelligence  proprietary  regulators  research_analysts  selling_off  short_selling  uncertainty  unintended_consequences  unknowns  Wall_Street 
january 2009 by jerryking

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