For readers of Money Stuff who haven't paid much attention to the Luckin Coffee controversy yet, this anonymous white paper makes fascinating reading.https://twitter.com/muddywatersre/status/1223274746017722371 …
-
Show this thread
-
February: "But that is an anonymous paper, published by someone who has no obvious claim to being an expert on the Chinese coffee market, who likely has a conflict of interest. Why assume it has non-zero truth value?" April: "... Oh."
3 replies 2 retweets 28 likesShow this thread -
Sometimes I envy short sellers. Is there any purer application of "My job is winning arguments on the Internet" than "The newspapers reprint press releases and in the short run the market is a voting machine. You're all wrong. So wrong. Can I borrow your shares? Will return at 0"
5 replies 15 retweets 93 likesShow this thread -
Unsurprisingly, articles about short sellers generally focus on motivations, opposing quotes from company, insinuations that if they're wrong they're frauds and if they're right the enterprise is unseemly, etc etc, and rarely "Kinda like this newspaper but paid for accuracy."
1 reply 3 retweets 33 likesShow this thread -
(It's a bit more complicated than "paid for accuracy" because markets are complex and you have to be *much* more accurate than the current market consensus *and also* good at the mechanics of putting on the short to have sufficient profits to cover costs of the operation.)
2 replies 0 retweets 18 likesShow this thread -
Replying to @patio11
Why do you say *much* more accurate? For a long/short fund, the hurdle to overcome (aka alpha required) to break even is Interest Paid on Margin Loan minus Interest Received on Short Collateral, correct?
1 reply 0 retweets 0 likes -
At IB that is upwards of 1.5% per year for a small investor, but <1% for larger accounts. That's not nothing, but also not really *all* that high either. Of course your second point still remains, that the risk management/"mechanics" of the short are crucial to get right as well
1 reply 0 retweets 0 likes
Depends a lot on whether the trade gets crowded; if you stay non-consensus then your borrow fees stay low but if other smart money enters your side in size and most longs aren't lending their shares (e.g. concentrated position of management) then could be X0~Y00% APR borrow fee.
-
-
Thanks. Twitter will use this to make your timeline better. UndoUndo
-
Loading seems to be taking a while.
Twitter may be over capacity or experiencing a momentary hiccup. Try again or visit Twitter Status for more information.