A dormant debate about the virtues of short selling is about to be rekindled with the imminent entry to this market of one of the new breed of “activist” short-sellers.
As The Australian’s Paul Garvey revealed last week, a US short seller, Glaucus Research, is only weeks away from publishing its first research on Australian companies.
The analysis will, of course, be negative and published after Glaucus has taken up a short position in the stocks.
In this market, Glaucus has identified two companies as targets and plans to “go public” with its opinions on one of them within weeks.
Given that it targets companies with market capitalisations of between about $500 million and $3 billion — it needs companies where it has the ability to borrow significant volumes of shares — it appears reasonable to assume the initial objects of its attention are going to be big enough to generate attention and trigger a new bout of debate about the merits and ethics of short sellers and activist short sellers in particular.
