, Columnist
Short Sellers Missed Tencent’s $250 Billion Party
They left a lot of money on the table as the Chinese technology behemoth slumped 44 percent from its peak.
They could have had so much fun.
Photographer: Steve Cicero/Photolibrary RM/Getty Images
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If there’s an upside to a downturn it’s that short sellers get to make a buck.
By borrowing shares, investors can sell what they don’t own. If the price falls, they buy the stock back at a cheaper level and return it to the lender (with interest), pocketing the difference. Assuming the shares fall enough and borrowing costs aren’t too high, a short seller can make a tidy profit while other investors lose money.