Tag Archives : write-ups


Short WRLD 6

Disclosure: Short World Acceptance Corp (WRLD)

For round two of the FactSet/SumZero Top Idea contest, I wrote about WRLD. Since this is the first full-length short thesis I’m publishing on the blog, a bit of background from the FAQ:

Why does Cable Car short stocks?

Although short-selling is logistically difficult and increasingly competitive, it is an essential tool to reduce the impact of market downturns on a portfolio. During falling markets, many stocks will decline in price, even those of companies with strong business models. During these times, having capital available to reinvest in high-quality companies can provide an important source of return over the long term. Short positions that increase in value when other positions are declining provide incremental capital when it is needed most.

In normal times, short sales can also generate incremental return by capitalizing on mispricing that results from misunderstandings in the marketplace. Security selection involves recognizing asset prices that can decrease as well as those that can increase. Cable Car does not view short selling as a moral judgement. Although Cable Car sometimes shorts companies it suspects of fraud or malfeasance, short positions often reflect Cable Car’s view that the market’s expectations for an otherwise good business have gotten too high. The activity of short sellers is an important part of fully functioning capital markets.

In general, I am reluctant to publicize most of my short positions. Although I’m a firm believer that short sellers play an important role in financial markets, they tend to attract unwanted attention. I’m not trying to demonize anyone in my report, and hopefully no one wants to demonize me. WRLD is a crowded position (there was even another write-up in the contest about it), so I don’t think I’ll be poster child for it. Not that I’d mind if it works out the way I anticipate!

This piece is written for other professional investors and discusses the technical factors and timing considerations that make me think WRLD is compelling today. As always, feedback and dissenting views are welcomed.


Click here to download the write-up.

By accessing the report, you acknowledge that the information contained therein is for information purposes only and should not be considered a recommendation to take any action with respect to any security.


NetDragon write-up selected as runner-up in FactSet Top Idea Tournament 3

Disclosure: Long NetDragon (777 HK).

The buyside networking and idea-sharing website SumZero and FactSet are sponsoring an ongoing investment idea contest this year. It’s a great forcing mechanism for me to put pen to paper on some of my highest-conviction positions, and time permitting I hope it will lead to more material I can publish here.

I’m pleased to share that my report on NetDragon was selected as a runner-up from among 130 submissions in the first leg of the contest, which focused on non-US ideas.

I am sharing the investment thesis publicly in hopes of receiving feedback. If you find the time to read the report, please consider taking a moment to share your thoughts — especially dissenting views — via email or in the comments below.


Click here to download the write-up.

By accessing the report, you acknowledge that the information contained therein is for information purposes only and should not be considered a recommendation to take any action with respect to any security.