How come some investors dare to short great stocks? A business may face some challenges and a drop in earnings, but when that business has been solid in the past, I don't understand why people may bet against it (I wrote about that subject, 6 months ago).
There's plenty of bad business out there. Why not bet against them? Why choose a business with great numbers, great ROE and great appreciation over time and not one of those stocks with a PE ratio of 80 or without any earnings since 2012?
You can find that kind of crap easily if you screen the market.
I discovered that my portfolio has a lot of heavily shorted stocks. I don't understand why so many people short them. Can you really short a business like Polaris, with an historic ROE higher than 99% of all the stocks on the market? And how the fuck Netflix and Valeant are less shorted than Lithia Motors and Carmax? (Well, actually, Valeant is slightly more shorted than Lithia Motors).
Anyway, here's some stocks I like / I own that are heavily shorted (percentage = % of float shorted)
Lithia Motors (12%)
Bank of the Ozarks (19%)
Chipotle Mexican Grill (20%) not so sure I like this one, but I don't dislike it either
United Therapeutics (23%)
And here's some stocks I dislike that are heavily shorted (I'd short them if I had to short something)
David's Tea (27%)
Tesla Motors (30%)
Sears Holdings (63%)
Compare the two lists. You'll be amazed to see that a very high quality bank like Bank of the Ozarks is being more shorted than Valeant. Or that a business like David's Tea (that doesn't have earnings) is almost equally shorted as Polaris which is very very profitable.
Maybe you could take advantage of that folly.