A theoretical question for @macrocephalopod and any other quant practitioners such as @sajidnizami -- would you consider shorting companies with high equity dilution a carry strategy?
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Ah Mr Octopus, allow me to show you to my friends in the Permian Basin
Hah, shale and utilities were the two sectors I was thinking about here. Ok the case of utes they are issuing stock and using the cash to pay dividends but not sure about shale!
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Thank you for the in depth response — the definition is helpful. Wanted to make sure I wasn’t completely off my rocker suggesting my book has a positive carry because I’ve on avg seen share count reduction of 3% on longs and dilution of 5% on shorts (I tend to short hype)
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Natural resource companies are real options on the underlying commodity. At the top of the cycle, the average PM is too young to have experienced a multiyear bear market, so valuations overprice the optionality.
End of conversation
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