![]() Instead of fearing the short sellers, directors should embrace their techniques. To fan the flames, they identify by name the key directors on the board. They tell others where to look for signs of weakness. They are sharks hunting in the darkened waters of the financial markets, waiting for their time to strike. Many companies fear short sellers, and rightly so. Over three decades of working with companies, national governments and politicians, I have studied the alchemy for how people exercise judgment. Most short sellers are targeting flawed judgment. Instead, the true cause roots back to decisions made or not made by the company’s directors and management years before. The cause for why a weakened institution is likely to fail is not some event that will occur in the coming days, weeks or months. The trigger point for a company’s demise, such as Martin publicly highlighting SVB’s flawed balance sheet, however, is typically not the root cause for why it fails. Look for the potential trigger points that will tip the target into free fall. ![]() ![]() Determine if a bet against the company will have a big enough reward. The recipe used by short sellers like Martin is relatively straightforward. ![]() Martin, the short seller, took his profits as the weak was sorted from the herd. In the early months of 2023, a short seller used Twitter to shine light on Silicon Valley Bank’s (SVB’s) weaknesses. Boards can use the “walk back” method popularized by short sellers to benefit their companies and their own decision-making. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |