Activist Short Selling in W31

Activist Short Selling in W31

  • Short selling bits and pieces: Short selling and ESG; PAA Research in Barron's; Insiders vs Retail Investors.
  • This week, we recorded one new major campaign. This is only second report by this activist short seller that had their inagural report in May
  • We highlight this week’s new campaign as it is proposing a straightforward short thesis with interesting supporting evidence. The catalysts are present and clear.
  • Finally, we look at a peculiar answer of a CEO of a medical device company when asked about investigations by insurance companies into their pricing.

Bits and Pieces 

Short selling and responsible investment: This recent study by AIMA looks at role of short selling in ESG. It uses carbon footprinting as an example to illustrate how short selling could create positive impacts for the wider markets. Fraud or bad corporate governance would have also been nice examples next to this.

PAA in Barron's:  Bradley Safalow of PAA Research, for whom the famous short seller Cohodes said, "He's the best," discussed four of their short picks in more detail. Also mentioned in this piece is that, since 2010, PAA picks:

outperformed the market by 50% on his longs and 30% on his shorts since 2010.

On August 11, Bradley from PAA Research will be presenting a new idea at Contrarian Investor Virtual Conference

Insiders vs Retail Investors: As per below tweet, Moderna’s Chief Medical Officer sold every single share he owned of the supposedly promising biotech in search of vaccine against COVID-19: 

On a related note, Muddy Waters had this to say about long side investing in biotech:

Big Movers 

While Genius Brands International Inc (GNUS) plunged further and reached Hindeburg's price target, this week was tough for one of other recent Hindenburg’s shorts. Facedrive (FD), a company which is allegedly more of a stock promotion than a real business according to the short-seller, has risen over 30% since the initial report. This happened without a response by the company and a follow-up by Hindenburg, so will be an interesting stock to watch in W32.

Another stock that has been quietly creeping up is Caanan (CAN), which was targeted first by Aurelius Value before the COVID-19 downturn and then by White Diamond Research in the middle of May. The short-sellers targeted the company due to its dubious fundamentals such as ongoing losses and corporate governance. The campaigns were both ultimately successful as the stock is down over 50% since then. However, it seems that the price of bitcoin which has been increasing recently might be prompting another rally in the stock. This was the exact reason why White Diamond targeted the stock after Aurelius Value. Thus, investors might be interested in scrutinizing what is going to happen. 

Canadian REIT troubles?

This week we have recorded an interesting campaign by...


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* Note: Presented data and analytics is as of available on 2020-08-01, UTC 12:00.

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