At least one short seller, Jim Chanos, was willing to act on such worries.
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Sino-Forest tumbled in June after Carson Block, a short seller, said the company exaggerated its timber holdings.
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The 2013 wrinkle is inviting a bear into the bull pen, with short seller Doug Kass playing the role.
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Part of what makes it so hard to be a successful short seller is that you must swim against the tide of popular opinion.
The Securities and Exchange Commission accused the firm of failing to disclose the role of a short seller in constructing a pool of mortgage-related assets sold to investors.
On the one hand it is clear that Alfred Little is a short seller who has a financial motivation to portray his findings in the most negative light possible.
The complaint alleges that Goldman improperly withheld material information from the buyers by not revealing the role of the short seller in picking the securities that went into the deal.
Our internal auditing team under the supervision of our board audit committee conducted extensive review and investigation into these allegations separately and found no basis for any of the assumptions made by short seller.
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Chief cheerleader in this self-serving effort has been Steve Eisman, a prominent short seller who contends that for-profit colleges, much like subprime lenders, sucker the poor and uneducated into borrowing more money than they could ever pay back.
The short thesis rests on the notion that the FTC has been asleep at the switch, missed a massive fraud for over three decades, and will shortly awaken (at the behest of hedge fund short seller) to shut down the Company.
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But brokerage firms are able to lend out shares from clients who were allocated stock in the IPO on the expectation that most of those shares would still be there when the time came to deliver them to the short seller.
The SEC should be criticized severely for doing away with the uptick rule on short-selling--no shorting of a stock unless it has moved up in price--and for its failure to enforce rules against naked short-selling--requiring a short seller to first borrow a stock before he shorts it.
Assuming the possibility that the short-seller's bearishness is unwarranted--which is a lot of the time--the seller, seeking to avoid losses on shares sold short, must re-enter the market in order to buy back the shares at a loss so that they can be returned.
Earlier on Wednesday Porsche had denied all responsibility for the recent market distortions and short-seller squeeze.
On the other hand, long-term holders of the shares also benefit when the bearish short-seller's negativity is warranted.
Saxe speaks with particular venom about short-seller Manuel Asensio, who is not shy in critiquing stocks he rates overpriced.
McCain also criticized Mr. Cox for eliminating a trading rule that acted as a speed bump to prevent short-seller from pounding a stock.
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Nonetheless, Chanos discussed what was required to be a successful short-seller, which included accepting that the conventional wisdom about a stock is wrong.
Instead I constantly read the work of bears like the hedge fund short-seller Jim Chanos, to see if they see something that I miss.
In fact, if Metzler is getting a 13% annual fee on NovaStar, then Smith Barney is probably charging the short-seller a bit more than that.
Citron is treading the same path as short-seller Muddy Waters, which scored a bullseye in exposing fraud at Toronto-listed Sino-Forest, and more mixed results elsewhere.
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He will present his best investment idea for this year, as will fellow short-seller James Chanos of Kynikos Associates and activist William Ackman of Pershing Square Capital, among others.
Such share discrepancies can result from innocent errors or from something more: naked short sales of Pegasus stock, meaning a short-seller has not properly gotten dibs on shares to borrow before selling.
The rules currently give a buyer's broker the option--but not mandate--to buy-in the short-seller's undelivered shares--that is, purchase the undelivered shares in the market and charge the seller's broker the cost of doing so.
If there's a silver lining to the SEC's silly decision, it's that markets are global, and if U.S. regulators are too immature to understand the importance of price discovery and the short-seller's role in it, other global markets will take the trading volume that our SEC intends to repel.
Ambac shares have lost 90% of their value since January 2007 and William Ackman, a short-seller who runs the hedge fund Pershing Square Capital, has railed against them (to his own benefit), saying the bond insurers could be insolvent by the second quarter because of their exposures to the structured finance market.
Predictably, short-seller advocacy groups lamented the toughness and cost burdens of the new regulations, under which a trader wanting to short a particular stock has to find a price above the prevailing national best bid and offer price if the stock has already fallen 10% or more from the previous trading session.
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With a short sale, the seller is asking the bank to take less than the amount owed.
Figuring he'd spotted an institution working a big sell order with a clever computer program, Park sold the stock short every time the seller showed up.
The company supplies components for Apple Computer's iMac, a hot seller in the U.S. But Bernard Tan of Merrill Lynch has downgraded NatSteel's short-term rating to neutral, although he still has a long-term buy on it.
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