Reddit Jolts Activist-Short Hedge Funds Into ‘Adapt or Die’ Mode
- Message boards are taking aim at the bears, and leaving a mark
- ‘We don’t have a problem with it,’ says Kerrisdale’s Adrangi
Shorting stocks has never been an easy way for a nice person to make a buck. For most of the bull market that followed the 2008 financial crisis, it was an outright nightmare.
But this? This is something else, as swarms of traders crowded in internet chatrooms storm together into long positions of heavily shorted companies. They are calling out -- by name -- the fund managers they hope to squeeze out of business, while reaping triple-digit short-term returns in the process.
The drama is causing a sudden re-think among the relatively small number of firms that successfully focus on activist shorting, a strategy that involves betting against a company and publishing research reports intended to convince shareholders the stock is overvalued. As Ben Axler of activist short-selling hedge fund Spruce Point Capital put it: “Adapt or die.”