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TOP STORIES
Are short sellers the spawn of the devil?17 June 2008COMMENTSAs HBOS has amply illustrated, the FSA's new rules do absolutely jack to discourage short selling. In fact, given Lansdowne shorting them, I might just do the same myself. Read all comments »Short sellers have proven the scourge of Bradford & Bingley, HBOS, Bear Stearns, Lehman, and any other institution that looks a little ragged around the edges.
Spurred into action by horrid ‘bear raids’ on B&B and HBOS, the Financial Services Authority (FSA) has rushed to the rescue with draconian new rules. As of 25 June, short sellers in the UK will have to make public any short position they hold related to 0.25% of a company’s stock (FT).
But short sellers have their advantages. Without the likes of David Einhorn (NY Mag), we might, for example, be none the wiser about the $1.1bn alleged discrepancy in the value of level three assets reported by Lehman in its Q1 call vs. its 10Q filing.
Lehman’s Fuld has berated Einhorn and his proteges. But according to Einhorn, management teams that complain about short sellers are usually trying to distract investors from serious underlying problems with their business.
Do short sellers provide a valuable service, or are their predatory tactics deserving of vitriol and tighter regulation? Go short or long on the practice below.
COMMENTSShort Roger, Hedge Funds, Tue 17 Jun 08It's up to David Einhorn if he wants to go short on Lehman Brothers and it's up to UK investors if they want to go short on Bradford and Bingley. If someone things they've made a mistake, it's also up to them to go long on the same stocks. It is not up to the FSA to try and sort this out. Add your comment »Gforce, Tue 17 Jun 08Being short of a stock doesn't mean it will automatically fall. For this to happen you need incompetent management and/or poor market conditions and in Hbos/BB/BS/Lehman it certainly was the case.
Mondeo Man, Risk Management, Tue 17 Jun 08If the FSA is willing to take such ridiculous action to keep the financial system afloat, just goes to show what a disastrous state we're in. Add your comment »Short fuse, Hedge Funds, Tue 17 Jun 08What's wrong with short selling apart from that it might force the share price of a teetering bank below the price at which the tottering wreck is trying to screw more money out of shareholders. Is this such a crime? If short selling is based on the subjective analysis of factual data (ie not secret info) there's surely nothing wrong. This is how markets work - or, in the case of London, worked. Add your comment »barclays sucks, Hedge Funds, Tue 17 Jun 08go short of barclays and get john varley and his team of cronies fired
Short boy, Hedge Funds, Wed 18 Jun 08Whats the worst that can happen - underwriting banks get stuck with a load of unsaleable stock after the rights issue goes tits up? Oh dear. Add your comment »Eugenics, Hedge Funds, Wed 18 Jun 08Short sellers are a blight on the market and should be put out of their misery. Add your comment »Horatio, Risk Management, Wed 18 Jun 08Need to speed up the rights issue process, rather than slapping controls on short sellers. Add your comment »Zcar, Risk Management, Sun 22 Jun 08What's outrageous about this particular case is that the FSA is blatantly acting in the interests of HBOS. What does it say about the viability of the UK's biggest mortgage lender if it needs the regulator to take such rash action on its behalf? Add your comment »Sylvester, Hedge Funds, Sun 22 Jun 08This rule is bad, but the FSA's threat to limit stock lending during future rights issues is infinitely worse. It's time to depoliticise the regulator and to get it to stop poking its nose into things it frankly doesn't understand. Add your comment » |
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