Skill rather than inside track for short sellers

Short sellers cleverly use news flow to make a profit on tumbling stocks, but sustained performance is rare

Friday 12 November 2010 at 06:49

Short sellers use analytical skills rather than insider information to profit from falling stocks, new research has found, but despite some single-stock wins, long term performance of the strategy has disappointed.

A fresh study by a team at the Kenan-Flagler Business School, part of the University of North Carolina, found that detailed and quickly-processed news analysis helped short sellers decide what positions to take on a stock, rather than using any inside information that may have been passed to them by a company.