Short Selling: Finding Uncommon Short Ideas

Kumar, a senior analyst at Columbia Threadneedle Investments, offers a guide that shows how experienced investors can avoid pitfalls, reap profits, and identify overvalued items while short selling stocks, in this complex but useful book. Addressing the stock market savvy, he shows how to find new ideas for short selling. Kumar divides the book into three sections, entitled “Framework to Finding Short Ideas,” “How Successful Investors and Analysts Think,” and “Risks and Mechanics of Short Selling.” In addition to detailing his framework, Kumar explains the advantages and disadvantages of leveraged businesses and various accounting red flags. He also examines the principles set forth by Ben Graham, described as the father of value investing, and presents interviews with noted value investor Jean-Marie Eveillard; activist investor Bill Ackman; and Mark Roberts, founder of Off Wall Street, an independent research firm for hedge funds. Kumar also discusses deciding when to hold or sell, offering examples of common mistakes and traps, and offers up numerous case studies on companies in a variety of industries, including Southwest Airlines, Ciena Corporation, Office Depot, and AIG. Those with investment skill and knowledge who are prepared to enter this inherently risky area will find Kumar’s theories valuable, but the average investor will not find the key to profitability here. (Nov.)