Laurent Condon, an expert dealer in France, received my Brief Sellers Don’t Have Horns short-selling contest — his second triumph within the annual competitors.
Condon beforehand received the competition in 2017-2018, and completed third the next 12 months. He has additionally excelled in a few of my different contests.
Along with the short-selling contest, I run a conventional stock-picking contest known as Dorfman’s Three-Inventory Derby, and an financial prediction contest known as Derby of Financial Forecasting Expertise, or DEFT.
Condon has completed first and third within the conventional stock-picking contest, so he has taken honors in 5 of my contests – the perfect displaying of any particular person.
Thus far, he hasn’t received any prizes within the financial forecasting contest “As you might know from my laughable ends in your DEFT contests, I’ve no clue about macroeconomics,” he wrote me a number of days in the past.
Brief sellers wager on chosen shares to go down. They borrow inventory and promote it. In some unspecified time in the future, they have to purchase it again, but when the worth declines within the meantime, they revenue. Consider it as shopping for low and promoting excessive, in reverse order.
Contestants in my newest shorting competitors did remarkably nicely: All 16 entrants picked a inventory that declined. That’s a feat by no means earlier than achieved within the 19-year historical past of this contest.
The median return was about 56%, the second-largest in contest historical past. The most important was 80% in September 2000-2001, when a fierce bear market was raging.
The newest contest ran from September 30, 2021 via September 9, 2022. A brand new one will begin quickly. You’re invited to play, whether or not you promote shares brief in actual life or not.
Condon scored a 91% return on his brief sale of Camber Vitality (CEI), which was exceptional contemplating that almost all vitality shares did nicely up to now 12 months.
He stated a 12 months in the past that Camber had “no earnings, reducing gross sales, (and) dangerous administration.” The inventory had spurted, based mostly on a press relation relating to a “patented carbon-capture system.”
Condon felt there was much less to that information than met the attention. “It appeared to me that the administration was extra busy issuing press releases…than working their enterprise,” he stated.
Additionally, Camber confirmed that Condon known as “explosive inventory issuance.” When an organization points new shares, it sometimes dilutes the worth of previous ones.
Now, considered one of his favourite shorts is MicroStrategy
David Heilman, a retired legal professional in Las Vegas, Nevada, seized second place with an 88% acquire on a brief sale of Carvana (CNVA). Carvana sells used vehicles on-line, and delivers a few of them from buildings that resemble large merchandising machines. Its debt is greater than 15 instances the corporate’s internet value.
Carvana was at about $322 when Heilman entered the competition, and now’s at about $33. Heilman thinks the inventory market will likely be “uneven and vary certain” within the subsequent 12 months.
Derek Galbraith of Westmount, Quebec, Canada, took third with a 79% acquire shorting Past Meat
Galbraith thinks the market will likely be in a “holding sample” for 2 or three months whereas buyers search readability about inflation. However he expects 2023 to be higher. “It’s onerous to see a foul recession when unemployment is traditionally low,” he says.
You Can Play
You’re cordially invited to enter my 20th annual Brief Sellers Don’t Have Horns short-selling contest. Choose a inventory that you simply count on will decline quite a bit from September 30 of this 12 months via September 8, 2023.
Entries should embody your identify, dwelling metropolis, telephone quantity, e-mail, and the identify of the inventory you assume fizzle. It have to be a U.S.-based inventory. You aren’t required to present your causes, however I respect it when you do.
You aren’t required to promote brief the inventory with actual cash, however it’s okay when you do.
First place carries a prize, chosen at my discretion. Previous prizes have included a shortcake and an album by pianist Bobby Brief. Second and third place carry no prize however glory.
Ship entries to firstname.lastname@example.org by midnight September 30. In case you want old style mail, write to John Dorfman, Dorfman Worth Investments, Suite 1900, 101 Federal Road, Boston MA 02110.
Disclosure: A hedge fund I handle (and put money into) is brief Past Meat.