A new study of short sellers paints an unflattering portrait of the professional investors entrusted with others’ money.
The study, Short Sellers’ Information Acquisition, interviews nine prominent short sellers and analyses 820 short reports.
It confirms shorts are informed and skilled, yet much of their work simply re-examines public filings overlooked by other professionals, exposing how often investing experts miss the obvious.
Their edge lies less in uncovering new facts than in presenting evidence clearly. “The best points come first”, says Blue Orca Capital’s Soren Aandahl.
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“The collective attention span of market participants is horrible and has gotten worse over time. A few years ago, I would write an 80-page short report. Today, I laugh at that. No one gives a flying rat’s ass about 80 pages.”
Concurring, another interviewee says less powerful information “dilutes the powerful information. Let’s say there’s evidence of fraud, but then you add some minor issues – it makes the fraud evidence less powerful”.
Reports must be concise, their points distilled to survive a skim-happy readership.
Muddy Waters Capital’s Carson Block describes his audience as “hostile … They want you to be wrong”. Shorts must “break through this hostility and make them realise they’ve been misled by the company’s management”.
For short sellers, the challenge is less uncovering fraud than navigating a market that can be lazy, inattentive, and too quick to trust company claims.
