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To add to the other comments here, a recent high profile case of something similar was Bill Ackman shorting Herbalife. Basically, he shorted the stock and then
by chadash 9y ago
To add to the other comments here, a recent high profile case of something similar was Bill Ackman shorting Herbalife. Basically, he shorted the stock and then went to the media with his research showing that he believed Herbalife to be a pyramid scheme. Ultimately, I believe he lost money on the whole fiasco, but it's not an uncommon strategy. The whole thing made the news after a particularly amusing exchange between Bill Ackman and Carl Icahn (who had the opposing view) on CNBC: https://www.youtube.com/watch?v=hCZRk1lL90Q https://www.youtube.com/watch?v=hCZRk1lL90Q. I worked on Wall Street at the time and I remember the entire trading floor at my bank was almost frozen as they were watching this live.
- tyfon 9y agoI see.. So it could be a viable business to do research like this, short stock and then release the information. It just has to be a bit more damning than this as the stock price is actually up today! Seems a bit shady in any case if one were to do this in the same way as when companies pay researchers to make claims publicly that benefit the company like the process leading up to the banning of led in petrol etc.
- gruturo 9y agoRegarding Ackman vs Herbalife, the old adage comes to mind: The market can stay irrational longer than you can remain solvent.