In 20 years of operating the annual Quick Sellers Don’t Have Horns short-selling contest, I’ve by no means had a winner request anonymity. Till now.
The winner, whom I’ll name Sam, is a 22-year-old inventory analyst who just lately earned a grasp’s diploma in finance from a school within the Boston space. His choice, FaZe Holdings (FAZE), declined 97.7% within the contest interval, from September 30, 2022 by September 8, 2023.
Which means Sam had a theoretical 97.7% revenue, since quick vendor achieve when a inventory declines.
FaZe supplies financing to assist individuals put video games and different content material on the web. In return it will get a minimize of their promoting income. The corporate misplaced $28.4 million within the first two quarters of this 12 months on income of $34.2 million.
Sam declined to have his title revealed as a result of he just lately secured a job as a inventory analyst, and was unable to succeed in his agency’s compliance officer to get permission to be quoted in public.
For the subsequent contest, which begins on September 30, Sam says he would promote quick MSP Restoration (LIFW), which seeks to determine claims paid by Medicare or Medicaid that ought to have been paid by different events comparable to auto insurers or employee’s compensation insurers.
The agency was based by John Ruiz, a trial lawyer, and went public by merging with a SPAC (Particular Objective Acquisition Firm, also referred to as a clean test firm). The inventory is down 86% up to now 12 months and traded for simply 19 cents a share as of September 15. Sam thinks it should go to zero.
Laurent Condon, knowledgeable dealer in Saint Rambert en Bugey, France, positioned second with a 96.7% achieve in Camber Vitality (CEI). That was the exact same inventory with which he gained the competition in 2021-2022.
Condon has gained this short-selling contest twice and positioned third as soon as, earlier than his second-place end this 12 months. He has additionally positioned first and third in my conventional stock-picking contest. Which means he has gained honors six occasions in my contests. Nobody else has come near that.
For the approaching 12 months’s contest, Condon picks WeWork (WE) as his quick. “My expectation,” he says, “is that the corporate will go bankrupt. The enterprise has by no means been worthwhile” and “the stability sheet exhibits a harmful image with method an excessive amount of debt in a excessive fee setting.”
WeWork describes itself as “a industrial property firm that gives versatile workspaces for expertise startups” and different tenants.
In third place this 12 months was Holt Livesay, a retired banker and real-estate investor. His quick choose, LL Floorings Holdings (LL), declined 53.7%. The corporate was previously named Lumber Liquidators.
Livesay lives in Franklin, Virginia and LL Floorings relies in close by Richmond, Virginia. “It’s virtually a home-town inventory for me,” he mentioned. “I had purchased it a few occasions and misplaced cash. I’m nonetheless rooting for the agency, however they’ve been struggling ever since going public.”
Ten individuals entered the competition this 12 months and 7 of them succeeded in choosing a inventory that declined. That was an excellent exhibiting, because the Customary & Poor’s 500 Whole Return Index was up about 26% within the contest interval September 30, 2022 by September 8, 2023).
You Can Play
You might be cordially invited to enter my 21th annual Quick Sellers Don’t Have Horns short-selling contest.
Choose a inventory that you simply count on will decline loads from September 30 of this 12 months by September 13, 2024, when the competition ends. You aren’t required to promote quick the inventory with actual cash, however it’s okay if you happen to do.
The winner will obtain a present having one thing to do with the phrase “quick.” Previous prizes have included an album by pianist Bobby Quick, a ebook of quick tales, and a strawberry shortcake. Second and third place carry no prize however glory.
To enter, please give your title, dwelling metropolis, telephone quantity, electronic mail, the title of the inventory you suppose will fizzle, and its inventory image. It have to be a U.S.-based inventory. Please embody a weekend in addition to weekday telephone, as I’ll must interview you over the weekend. You aren’t required to present your causes, however I admire it if you happen to do.
Ship entries to firstname.lastname@example.org by midnight September 30. In the event you want old school mail, write to John Dorfman, Dorfman Worth Investments, Suite 1900, 101 Federal Avenue, Boston MA 02110.
Disclosure: I’ve no positions, lengthy or quick, within the shares mentioned within the column at this time, personally or for shoppers.