Just as an investment manager adds to high conviction positions, the Financial Times rightfully doubled down on its weekend coverage of Jim Chanos (Front page and Lunch with the FT, FT Weekend, July 25).
Financial failures are important reminders that efficient capital markets require naysayers not just cheerleaders. Zombie firms will probably be more prevalent in post-Covid-19 economies, increasing the short-sellers’ relevance. That said, it’s worth noting the historical performance of Kynikos’ long/short fund (beats the S&P) versus its short-only strategy (trails the S&P). This doesn’t diminish the role of short selling but instead highlights its impact on a portfolio’s total risk-adjusted return.
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