Short-selling is never for the faint-hearted, but it has been especially difficult during the past few years of a raging bull market.
To make matters worse for short sellers, there’s a new effort to force them to disclose their positions, and it is being promoted by the exchanges and a company that was the subject of the most transparent short bet in recent memory: Herbalife, the mutli-level marketing company. Herbalife is now under the eye of an independent monitor, after paying $200 million to settle a Federal Trade Commission investigation — thanks to short seller Bill Ackman of Pershing Square Capital Management.
The lengths to which Herbalife, and its investors, went to try to crush Ackman, who has recently exited his short, is clearly one reason why other short sellers fear mandating such transparency. It might crush them, too.
Here’s my essay for Institutional Investor explaining this effort.
I also recently interviewed Kerrisdale Capital’s Sahm Adrangi about short selling in today’s markets for Worth magazine.