Here’s how Marc Cohodes, veteran short-seller, and the guy who “brought down” Home Capital, shorts companies:
“I never, ever, ever get involved in what I would call open-ended situations. . . . I have avoided pie-in-the-sky names. To use an analogy, I’m not interested in climbing into a tree and wrestling the jaguar out of the tree. I’m interested in someone shooting the jaguar out of the tree, and then I will go cut the thing apart once it hits the ground. Instead of open-ended situations, I like to short complete pieces of garbage with fraudulent management and horrifically bad balance sheets. I look for change, I look for ‘if this goes away tomorrow will anyone miss them’?….”
In summary, Marc Cohodes looks for companies that are “frauds, fads, or (impending) failures”, stalks them (Marc calls himself a “stalker”) until they’re weak, and then quickly pounces, initiating a short position; riding the stock down, covering when the time is right, and making money through the process.
Learn more investing strategies in my new book, Capital Compounders, on Amazon: http://a.co/3XHhnKe
Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.