Short selling is one of the oldest and most potentially lucrative financial tactics in use. While most stock purchases and investment required diversification, a short sale is focused on a single stock sometimes for incredible sums of money. This investment strategy is not for the weak of heart or those who have not done the proper research and can be very difficult to gain support for.
There are a few notable examples of short sale focus funds but none quite as unique as Sahm Adrangi’s Kerrisdale Capital Managment. His new fund is the first-of-its-kind, relying upon their hedge fund managers’ ability to raise money in to support their specific investment philosophy. In many cases, this is most distressed assets such as for energy companies and securities backed by residential mortgages. Kerrisdale’s strategy, however, will be to use the money to short the stock of a soon-to-be-announced public company.
What’s notable about the short sale is that it is over 100 million dollars, and represents nearly 20% of Kerrisdale’s invested capital. It’s clear that without going into too much detail these fund managers have been able to jimmy a lot of interest and confidence in the thesis.
When asked for more details, officials at they’re still could not answer completely but they were willing to provide brief response. Adrangi said “We’ve taken a company that’s worth north of $10 [billion], and we’ve endeavored to get everyone to understand the insights we have about it,” this valuation gives us some idea of what the company has but no guarantees.
This formal announcement was scheduled in May, and was revealed to be a short sale of PLSE. In a tweet the company said “We’re short $PLSE. Full report at http://kerr.co/plse . This $400m med device co is up 6x since 2016 IPO yet has achieved very little 1/6” For more info about us: https://www.crunchbase.com/person/sahm-adrangi click here.
Eventually, we saw the stock crater down to just under $11 fresh air on September 13th. It is yet to recover from the position that it was short sold at by Kerrisdale. In retrospect, we can see that Sahm’s expertise was on point, The fun was able to net a healthy profit in a very short amount of time. It’s clear to see that all eyes will be on Kerrisdale in the future, with markets responding in kind with their short sales in the future.