anyone looking into shorting the chinese construction (and related) companies? will looking it myself some more. Will share
Eike is getting destroyed in the media every week. I'm skeptical of shorting situations like this because with so much pessimism usually the asset trades bellow its fair value, he also employs a lot of people, no idea if he will get bailed out or not but its a risk. I was actually thinking of buying one of his stocks because there is probably one good company that is getting dragged down in the media hate. But only 2 or 3 trades in NY and I don't have a brazilian broker because it hurts my US buying power
Off the cuff, and not having read anything except the first post, I'd like to comment. First, it should never matter to you who "else" is short (or long) or neutral. More pertinent to this post, in shorting you should always leave yourself an out, no matter how bad the company looks (bad meaning there are a lot of strong reasons the price may drop). There are larger companies always looking to buy a company on the cheap, even if they want just a part or even intellectual property of the "dying" company. Acquisitions typically raise the stock price of the company being purchased. Of course, none of this is as important as sticking to your rules for closing out a position. I have not opened a position long since 2005, except some of the ultra short etfs.
http://www.citronresearch.com/wp-content/uploads/2013/04/UNXL-final.pdf Really interesting work by Citron. No shares at IB otherwise I'd put a short right now for a panic tomorrow morning
Borrow is expensive, but why not sell the combo in the options market and then buy stock as you wish to cover?
As I understand the borrow rates after the options prices (due higher delta hedging costs) so one way or the other you pay up