Folks who profit from shorting in my group of associates are deemed morally upstanding. Why? When your downside is infinity (the shares explode) and you put the work in to create the investment case for a short sale. Not just a "I got tipped" where your maximum downside is what you invested. Your best shorts if they work are frauds, but even they can take forever to unravel (look up "Wirecard") - indeed the people behind frauds are usually pretty smart and try to cover their tracks. Shorters are vulnerable to being bought in at any time (the broker/lender recalls the shares & you just have to buy back) or takeovers where there is generally no chance to cover before the announcement. So it's not an easy pursuit. What are the benefits to others? Discovering fraud or reading the counter-thesis from someone who has dug deep, so they re-evaluate their shareholding. A simple different view on a company which makes you think why you hold and learn from. I accept people coming on here and saying "ADN is going to zero" isn't worth shit; neither is "Meet you at the $1 Poochera Pub Party". Shorting assists in securities trading closer to their fair value, which ultimately is better for the company - imagine if ADN had managed to place a bunch of stock at 40c to some naive investors, and the shares fell to 15? Isn't it better for them to place stock at what most believe is a fair price given where ADN is at right now, which if all your theses are correct will give holders a very nice return over a 3-5 year period from here. As I've noted before, ADN going into the All Ords and running to ~40c was a lay down misere at that time. $900m market cap, ~2x NPV of the early FS, significant capital to raise to get there, no BoA's at the time, big gain over a short time because of the share register. Subject to your tax situation, everybody on here should have sold and would have been able to buy back way more cheaply (with a few small exceptions). If I offered $500k for your $50k ute, you'd be off like a flash & go borrow another one to sell to me. I've enunciated short positions to others in two pump and dump situations designed to help funds lift their performance - both stocks went bust (one Aussie, one US). I've challenged dog-shit broker research and made them admit they hadn't done the work but were just pushing the corporate dollar. I've done the same to other brokers who even worse were bending their work to make the company look good so they could do capital raisings. Ask yourself, if somebody wrote a ridiculously optimistic piece on ADN, built bullshit DCF's and said the shares NOW were worth $1, and you piled in more money on that premise, how would you feel if you discovered the work was bullshit and the shares fell in a heap? Who helps you find out? Short sellers. Most short sellers have a way stronger moral compass than long-only investors because they are looking for fraudsters (accounting fraud or the real thing) and other unsavoury aspects. That
@Crabdoctor1 is why I come on here and admit to being a shorter. It's also why James Marsh & the ADN board were naive in the extreme to write that BS in the last quarterly. I hope the new lawyer on the board makes sure it doesn't happen again. Finally, shorting will never be banned for the reasons I have given, plus in many cases it's genuine arbitrage - eg long BHP London, short BHP Aussie (which worked big time) or a pairs trade eg. long AMD vs. short Intel. The fact this echo chamber has worked itself into a lather when ~1.6% of the shares in a wide open register are sold short (i.e. nothing) and influenced the company to make themselves look utterly stupid, is quite sad. I'm an investor who takes fundamental short positions in companies, your mate the yoghurt maker is a trader looking for the scalp - long OR short. He found ADN and hasn't been near it for months. Why? Like me, he probably can't find a STRONG fundamental case to short sell ADN. I can postulate some scenarios (see yesterdays post) but they are weak and nothing I would put money on. I accept there are shorters who talk their book and try to bury a stock with lies and rumours; exactly the same as there are morally dubious long investors who try to pump up their shareholdings with BS & rumours. The morality works both ways. Just because
@Pezz69 has a hatred of shorters and can't see their use doesn't mean everyone else on here should. That's it for the time being.
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