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Strategies & Market Trends : Value Investing

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petal

To: RetiredNow who wrote (65589)	12/5/2020 10:38:37 AM
From: E_K_S	1 Recommendation Read Replies (3) of 78794

I was looking at starting a short for the first time in many years to see how my Street Smart Edge platform does the trade. I found out at least for my test stock they charge me to borrow the stock to short. I suspect it is specific to the stock I want to short and my plan was to hold that short (and others) for 6 months or until I thought it was again selling at a fair value price. Note, this stock is one I have owned since it IPO'ed in late 2018, never booked a profit, revenues were flat but the company had intriguing technology in the Fuel Cell business. I sold my last 10 shares Friday at $28/share. Those had a cost bases of $5.65/share The stock IPO'd 7/23/2018 at $22.60/share traded at a high of $38/share, reached a low 10/21/2019 at $2.50/share and closed at $28/share Friday on better than avg weekly vol. EPS estimates still show losses out to as far as they estimate (12/2021) and their technology is 1st generation when others have 2nd generation more efficient fuel cells. (Note: This is just one case from many where I have followed the company, believe I know fair value and am a seller of the stock. Now was thinking of starting a short position.) Long story short is they wanted to charge me a daily rate of $0.01 for my 50 share test which works out to 0.25% (annualized) to borrow the stock (Hard to borrow on Schwab's list). Not too bad but I need to check the rates on other short candidates. I wonder, if it might be a good time to explore building a small basket of short candidate stocks that would also act as a hedge for the portfolio. Maybe just buy a small position in a short ETF (not sure I want anything leveraged) but those typically have a large 'decay' rate so not good to hold for six months. Same w/ Put options. Extreme Markets always provide a good opportunity for those that are patient (reversion the the 'mean' strategy). Especially when there is sector rotation and you can focus on the value candidates in those sectors. I thought that when studying and scanning value plays, could have twice the opportunity to build a few short positions on those candidate stocks that were hugely overvalued. EKS

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