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Why Short Sellers Attack Your Stock
In any short sale, we have the short sellers fighting the company. Now by short sellers I mean the predatory, which is to say the aggressive, short sellers.
Aggressive short sellers take steps to make sure that their trade works. They do not simply sell and hold while praying for a profit. They get off their butt and do something to get results.
Something to get results can be making public some information on the company like Mr. Ackmann's presentation on Herbalife, or Muddy Waters exposing of Chinese stocks.
How would you like to come to your office and find out you had been targeted? Maybe you already have
Shorts can lobby the authorities to get prosecutions going. Shorts can make a continuous public relations campaign to warn customers away from the company
Predatory Short Selling. In fact, these steps are only limited by the imagination of the short seller, his budget, and the law.
Only One Will Survive. This puts you and the short seller in a life or death battle.
Only one of you will survive.
Fortunately for the short, only he knows this. The company never gets it.
The Company is Defenseless. Let me make you an analogy. Suppose this was a boxing match. Pretend you are the short. You know you are in a serious fight. The company does not. As the predatory short, you can prepare without fear of interference. As a serious fighter and a short, you would prepare your attack over time with great enthusiasm. The company does not prepare. As the company does not know it is in a fight, you can get behind the company and hit it from behind with a rabbit punch. The company will let you do that. After your first attack, the best the company will be doing is to scramble to deny your attacks. Confusion will reign in their camp. You, the short seller, will rain your heaviest blows down on the company. The company may not even defend itself. When it realizes there is a fight, the company will only try to defend against your attacks, they never counter attack. You do not have to disclose your name in reporting your short position, so the company may not even know who is attacking them. As a short, you have the advantage of having considerable public information on the company. You can hire investigators to dig up even more.
I cannot recall any company ever investigating a short seller.
The media is totally on your side. They love bad news and scandal. Even if they try to be fair and balanced, they will always present your side as a short seller and the company's denials always look lame in the media.
If you do it right as a short, it becomes a public lynching where the company can do nothing right. The public, the authorities, the shareholders, the media all join the lynch mob. Enron. WorldCom. HealthSouth.
The company becomes another wet spot in the highway of business. The vultures move in and a receiver is appointed who sells your assets for a pittance.
If you like one-sided battles, where you can kick your enemy in the groin all you want, without any risk of him kicking you back, predatory short selling is for you.
Is this a great game or what?
Fight for Your Company Email me at John.Lux@ Securities-Law.info
(240) 200-4529 Get my books on Amazon.com. How the Shorts Raid Your Stock, Destroy Your Company and What to Do About It, Bash the Stock Bashers!
