Comments on: So, You Think You Can Be a Great Short Seller

By: Lesenswertes – Wochenrückblick | valueandopportunity

Lesenswertes – Wochenrückblick | valueandopportunity — Tue, 01 Nov 2011 11:19:31 +0000

[...] Erfahrungsbericht eines Netflix Short Sellers und warum Whitney Tilson jetzt long Netflix ist. [...]

By: Portfolio Manager

Portfolio Manager — Sat, 29 Oct 2011 18:38:27 +0000

As the chart highlights, I reached a self-imposed purchase limit on my last purchase in Oct 2010. I find strict purchase limits are important for staying power. The position almost doubled from there and that was as far as I wanted to go. I contemplated easing off some at the next significant drop. When it hit $200, I covered one-third at a loss. I covered the second-third at $110 at a gain. Like you and others, I was convinced I had the analysis correct, but that did not make it easy. My point of posting this experience was not to say I was right, but to demonstrate how difficult it is to short even when you are sure you are correct.

Lee S. Ainslie III gave a speech at a CFA Institute Hedge Fund Management Conference in 2002 in which he outlined all of the difficulties of going short. Given the odds against shorting success, one has to be good at risk management in order to pull it off successfully. I think you cannot pull the trigger on just an average-chance opportunity. It has to be a highy likely, asymmetric opportunity. In my opinion NFLX was that.

By: Friday links: have a plan

Friday links: have a plan — Sat, 29 Oct 2011 08:43:35 +0000

[...] The long story of a Netflix ($ NFLX) short. (Margin of Safety) [...]

By: Greg

Greg — Sat, 29 Oct 2011 08:38:23 +0000

Hi there, well, I was one of the Netflix shorts but have a few BUTS to add….I shorted it at $184 and then watched it ride up to more than $300. I was convinced my analysis was right but started to sincerely doubt myself..but I hung on, which wasn’t easy as it was the largest position in my portfolio. That said, when the stock started to plummet, I got out at $150. So I made a nice 18% return in a little more than a year but what a tough year. My question for the author is the same as another poster: what were the increments you got out at? I found it very difficult to hang on for longer than $150 because the Street manipulates everything and I was afraid they could just as easily cause the thing to soar again. Where did you find the courage and conviction to hang on to $78?

By: David Merkel

David Merkel — Fri, 28 Oct 2011 19:55:13 +0000

I try to stay away from situations like these. Echoing Keynes, the market can remain insane longer than I can remain solvent.

Glad that you won; it means you sized you position appropriately, and that’s a skill that few have, even at many well-known hedge funds.

By: Ken

Ken — Fri, 28 Oct 2011 19:34:47 +0000

Great short. Although, you elide where you covered the other portions of your short, stating only when you covered the last of your short. Care to illuminate on that, in the interest of full disclosure? Did you cover some of it at a loss in late July or in August? If so, what percentage?

By: Friday links: have a plan | Abnormal Returns

Friday links: have a plan | Abnormal Returns — Fri, 28 Oct 2011 16:55:32 +0000

[...] The long story of a Netflix ($NFLX) short. (Margin of Safety) [...]

By: Jeff

Jeff — Tue, 25 Oct 2011 23:32:05 +0000

http://www.youtube.com/watch?v=PxtBKpk7Wcs&feature=related

This is another good video, but this time, where Cramer admits got it wrong.

By: Jeff

Jeff — Tue, 25 Oct 2011 23:31:09 +0000

Great post. Congrats on your short.