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Opinion
Matt Levine

Hedge Fund Dropped Some Hints About Its Big Short

If you know about a big hedge fund short presentation before it happens, can you trade on it? Take this quiz to find out!

Kerrisdale Capital, the self-promotin'-est hedge fund in the land, is out with its big billion-dollar short idea, and it's Globalstar. Here is Kerrisdale's report arguing that Globalstar is worth zero, and the 144-slide presentation of the thesis. The basic thesis is that the market dramatically overrates Globalstar's ability to monetize some wireless spectrum that it owns: that Globalstar basically trades as an option on that spectrum, and that spectrum's maximum value is zero, so, y'know. The market so far ... well, it's not at zero, though the stock is down by more than 20 percent so it's having some effect.

In terms of drama, Kerrisdale's Globalstar short is self-consciously modeled on Pershing Square's Herbalife short. Like Pershing Square, Kerrisdale built up advance hype for its presentation, previewing it as "the best short we've come across, ever," and releasing an actually funny preview video calling it "the biggest stock promotion we've come across since Sino-Forest" -- all without releasing the name of the company. Like Bill Ackman, Kerrisdale manager Sahm Adrangi got a room in midtown and put on a big presentation for investors and news media. There's even a website called factsaboutglobalstar.com, which cognoscenti will recognize as a reference to factsaboutherbalife.com.