Short Selling Using a Quantitative Value Investing Approach

Why Bother?

Many professionals sell short a stock in order to make a profit just as they do with their long portfolios.  However, that is not the primary focus of our short portfolio.

Because the market (eg a long tracker) gives you 6+% per annum (if you stay in it long enough), a short portfolio has to generate 6+% excess return just to break even.  And that is not including trading expenses, which are greater for short selling than normal long trading.  That is quite a headwind to sail against!

On the plus side, because most equity investors are...