The vast majority of short selling is focused on looking for dodgy balance sheets, and or management doing naughty things. This method has a huge drawbacks in my book. First of all, there is almost no edge in doing this. What tends to happen is that every fund manager and algorithm picks up on the same behaviour, and you end up with a very crowded shorts. Crowded shorts is where short selling goes to die - so I avoid this like the plague. Crowded shorts that have destroyed fund managers includes stocks like Tesla, Evergrande, GME, AMC, Volkswagen among others. With that in mind, I try and short “uncrowded shorts” - or in other words - popular longs. Please bear that in mind in the analysis that is to follow.
