In response to many questions from the Short Selling Blog:The screen featured in the article can be described as follows:US companies with a market capitalization greater than one billion dollars and with a 20-day average trading volume greater than 100,000 shares.These companies are less volatile than their smaller brethren and much more likely to be borrowable.ADRs are excluded.
Many professionals sell short a stock in order to make a profit just as they do with their long portfolios.However, that is not the primary focus of our short portfolio.Because the market (eg a long tracker) gives you 6+% per annum (if you stay in it long enough), a short portfolio has to generate a 6+% excess return just to break even.And that is not including trading expenses, which are greater for short selling than normal long trading.That is quite a headwind to sail against!On the plus side, because most equity investors are long-only, there may be more mispricing opportunities to take advantage of.So most investors should back off now and concentrate on their long portfolios.But a very small number of mechanical equity investors may be interested in this portfolio for asset allocation and diversification purposes.
As a quantitative value investor, I‘ve always struggled with the question of how long I should keep stocks in my portfolio and when I should sell these securities.
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At MFIE Capital, our objective is to help you implement a systematic long-term investment strategy that works.
We participated in the annual 'investors competition' (beleggerscompetitie).