Things have been so difficult for short sellers in recent years that many of them have quit selling stock short. However, some short sellers may make some of the best investors on the long side — by applying their short-selling philosophies to picking longs.
When a short seller goes long
At the recent Capstone Student Investment Conference (CSIC), Stephen Schurr, senior managing director of equities and portfolio manager at Balyasny Asset Management spoke about how a short seller goes long. Prior to joining Balyasny, Schurr was a pm at Point72, and prior to that he was a pm at Brahman Capital. He started his career as a senior analyst at Jim Cahnos' Kynikos Associates.
Schurr explained that short sellers typically turn situations upside down, and he’s tried to do that on the long side more recently. He likes to contextualize the universe of potential short positions. About a decade ago, he analyzed one- and two-year S&P 500 returns to see what stocks were trading in the bottom decile or quartile.
