Several Canadian companies in the past few months have been the target of short sellers. Either through the release of a very bad (in terms of comments, not quality) research reports, or an executed plan of smearing via social media, companies such as DH Corp., Home Capital Group Inc., Nobilis Health Corp. and, of course, Valeant Pharmaceuticals International Inc. have all been attacked, resulting in large short-term losses for investors.
The best advice if you own a stock under attack? Focus on the fundamentals. Read More…
When you stick to industries and companies you know about then there is nothing to worry. Way too many people just follow trends and so when they see what appears to be short selling they panic way too easy.
I’m glad the piece mentioned to look for stocks that pay dividends. This is one of the key points. These shortsters as i like to call them prefer not to have to pay quarterly for holding onto something they plan on offloading soon so they avoid these types. Unless they are in it for the long run and know the retuen will be much higher (e.g. Blackberry).
Ahh so look for things like high insider ownership. That’s good to know!
Poor Valeant. Why doesn’t everyone just leave them alone? They should be a case study in schools.
Learned a lot here. Didn’t realize how much control short sellers could have on stock performance.
I’m guessing you will never see them try this with an IBM or other blue chip.
Can this happen in the Forex market too?
I always look for low to no debt in company sheets. As the article points out shorters look for easy prey which tend to have high debt which in the end make other investors nervous — opportunity: short sellers.
I remember this happening several times with Apple, pre-Jobs return. It was like every week. It was smart of jobs to scale back the product confusion and streamline the company. It made it harder for these sellers to do their thing.