No doubt this will confuse my American readers. I can see themselves saying “Why is this guy talking about a failed short?” Generally speaking my American’s friends advice to me is to talk about how awesome you are, and never show weakness. I have spent enough time in the US to understand why that is sound advice in American cutthroat corporate culture. But my brand, if that’s the right word, is to be straight with people, and to write about what I am thinking about. So here we go.
I shorted a company, because I could see it was involved with CLOs and corporate debt. Generally speaking companies in this area have traded poorly this year, but amazingly, this company has now managed to solicit competing bids to buy it. A bid for a company that I am short is not necessary a failed thesis. You often see bids for companies at the top of the cycle as CEOs can see earnings growth is weakening, and hope to offset that via an acquisition. This almost never works by the way. That is why often an acquiring company can make a good short - and that what we are going to look at today.
