Re the first story: 1. Shorting your competitor to hedge your locked-up shares is a fun prisoner’s dilemma. 2. I remember a WSJ story in 2001/2002 about energy trading execs shorting their competitors as a hedge. Eg ENE execs shorting Dynegy and vice versa.https://twitter.com/matt_levine/status/1131233567424565248 …
It seems to me that shorting your #1 competitor is plausibly insider trading under the prevailing theory of the crime in the US if you have material knowledge of your employer’s status/plans.
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Now that’s a tricky one. There was a startup in the U.K. that was shorting the incumbent (I think in the funeral industry? Can’t find the article). But it’s different at scale.
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But I don’t know if it would be misappropriation unless there was specific news. If Dara bought Lyft puts and Uber cut prices 25%, that would be a strong case. But just shorting the competitor without a catalyst seems defensible.
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Like, you’re misappropriating the informed short that your employer could be doing.
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This sounded familiar. Sure enough, Matt wrote about a similar little thought experiment last year.pic.twitter.com/WkTDDQE5Fx
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Also: isn’t that basically doubling down on idiosyncratic risk of Uber. If Lyft gains market share they lose on their Uber shares and again on their Lyft shorts. And the market shouldn’t compensate them with extra risk premium.
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Right, so the signal is that there isn’t anything special about Uber.
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