Monday, March 2, 2015

To short PPC and SAFM

I consistently make money betting against the shorts (termed as short squeeze). When they short too much, they are running out of stocks to short. When the stock has been shorted more than 25% of the outstanding shares, opportunities exist. For my limited actual trading, the average return for this scenario is 24% (vs 13% for all stocks I traded in this period). There are about 44 cases in about 2 years.

The current stocks are the two chicken companies: PPC and SAFM. They have good fundamentals and the shorts are over 40%.

Only hedge funds short constantly (another term for hedge for most folks). The hedge funds in general are not doing great as a group (they cannot even perform better than SPY in the last 5 years).

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