My Short Attack Experience
My career spans several short attacks in both Sell-Side Equity Research and as a Corporate Executive.
I have experience both as a successful attacker and successful defender. I also have one failure.
The majority of short attacks I have experienced are either structural or earnings / performance driven in nature. The two narrative driven attacks I have experienced were easily refuted.
As a Sell-Side Equity Research Analyst, I experienced six short attacks.
Four of them were initiated by me and two were successful defenses. Each attack was based on a structural flaw that resulted in a 50%+ share price decline.
Ultimately, each company needed to change management or strategy or something else in order to resolve the irrefutable premise of said structural short attack.
Sell-Side Equity Research Short Attack Experience
Ehealthinsurance (EHTH): Structural short due to higher-than-expected churn among individual and family plan members. Additional issues around technology connecting to Healthcare.gov. Circa 2015.
Cerner (CERN): Structural / Earnings performance based short. Based on Cerner’s industry forecast and triggered by 3Q15 earnings miss, based on read-through from Imprivata’s results. Circa 2015.
WebMD (WBMD): Earnings / Structural based short driven by a $100M revenue decline due to pharma patent cliffs. Circa 2012.
Weight Watchers (WTW): Structural based short pair trade due to innovative technology from Dexcom circa 2013.
Medidata Solutions (MDSO): Narrative driven short attack focused on business model. Circa 2014/2015.
Qihoo360 (QIHU): Narrative based short focused on issues with the business model and lack of understanding business model monetization. Circa 2013.
As a Corporate Executive, I have had to defend against three short attacks. Two were earnings / performance focused and one was structural.
Data Center REITs and DFT Data Centers (DFT): Earnings based short attack focused on lack of leasing results expected in a given quarter. Circa 2016 and 2017.
Caesars Entertainment (CZR): Performance based short focused on leisure and travel trends in Las Vegas. Circa 2019.
Athenex (ATNX): Structural short attack from Viceroy Research primarily focused on where clinical trials were conducted and lack of drug efficacy. Circa 2020. Defense failed because FDA rejected the lead drug.
Change is the only successful defense to a structural short!!
The company must change something in order to debunk the irrefutable premise of a structural short.
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