ItsAValueTrap

NFD.A - the company mainly owns stocks and is trading below liquidation value. unfortunately the company is highly illiquid (there are entire months where nothing trades). PNP and AAB also trade at a discount to liquidation value, but their managements are nowhere as good.

Sorry, to clarify: You won't entirely avoid bid/ask spreads with IB. However, they allow you to use up to 3 continuously updated volatility orders. These will constantly update your option order's price as the underlying stock price changes. You can try to have your order stay at the bid price and hope you get your order filled. However: A- The volatility order isn't updated that fast. So if the underlying price moves very quickly in a split second, HFT algos may pick off your order. B- You can't model any type of volatility curve or skew, though that may not be a big deal.

If the interest to borrow the shares short is very high, usually put-call parity will break down and the calls will get cheaper and the puts more expensive. This reflects the cost of borrowing/lending the shares. From the short seller's perspective: Instead of shorting the stock and paying really high interest, you can sell the calls and buy the puts. This gives you essentially the same position as shorting the common stock, BUT you don't have to pay interest. Of course things will balance out and the calls will start getting cheaper and the puts more expensive. From the buyer's perspective: If your broker isn't giving you good rates (or any rate) for lending out shares, you can buy the calls and sell the puts. Unfortunately for the retail investor, order execution on your options order may not be great and you'll likely be paying bid/askspreads. (Unless you go with Interactive Brokers / IBKR.)

If the borrow cost is really high on the shares... you probably don't want to own them in the first place. The short sellers tend to *really* know what they're doing (even if they don't make that much money). In a similar vein... you can screen stocks based on short interest to look for short ideas / things you really don't want to own: http://finviz.com/screener.ashx?v=111&f=sh_short_o30 (Though Fairfax is probably one of the exceptions that proves the rule.) 2- Any leveraged ETF will cost a few percent to borrow. Needless to say... avoid them. The reason why is because every day (many of) these ETFs have to trade in ILLIQUID markets. To get the additional leverage, they may be trading swaps or other derivatives. And it's not like they are trading S&P 500 futures either (which has a lot of liquidity)- they generally trade less liquid products. So every day, they will lose a lot of money in spreads on their trades. This is why short sellers pay a few percent to short them. In really crazy markets like 2008-2009, I believe that some leveraged ETFs lost around 20%/year from trading costs.

The cost to borrow used to be around 14%. It has died down to less than 2% right now I believe?? The puts aren't that expensive right now. Shorting via puts can be more profitable and stress-free than shorting common stock... as long as the decay / premium cost on the put options is cheap enough. 2- In terms of borrow costs, some really expensive shorts right now are: TSLA 80%+ ? (I am still short this... ugh...) ATPG ~70% (covered this a long time ago when the borrow was "only" lower double digits, missed most of the move to 0) ANGI, Yelp may be really really high AIG used to be 35% There was also the CMED (now CMEDY.PK) short squeeze a while back. Fortunately for me I shorted a tiny amount and didn't cover. (I also didn't make money since I shorted a tiny amount... short selling common stock is not a great way of making money.) 3- I'm not sure efficient markets would have borrow costs that are so high. But that's another discussion hehe 4- I guess I learned something today... I didn't realize that the days to cover was so high. 5- Isn't short selling common stock *always* dangerous? Look at Volkswagen. It's a large cap stock and a short squeeze is not "supposed" to happen. But it did. Though certainly for any stock with huge short interest (like JOE, TSLA, etc.), you should probably use a smaller position if shorting the common stock.

I wouldn't really characterize land as a call option. It's an asset that can fluctuate wildly in value... sometimes several times in real estate boom/busts for real estate-related land. It comes down to what those assets are worth in the future. 2- On one side you have Fairholme and on the other side you have Greenlight. Both of them have presentations on St. Joe... everybody can come to their own conclusion. I don't have anything really insightful to add to either thesis.

Oops, got the states mixed up. Good eye.

I don't like the idea of shorting salesforce because the underlying business is a high quality business. I think that there are some shorts where your rate is return is going to be very poor. If a stock takes a long time to collapse, your rate of return is not as good. And if it goes up several times before then and you are forced to cover... :/ Some short ideas: Einhorn has some detailed presentations on JOE and GMCR. (I am short both.) At GMCR there may be some fraud going on. JOE is a bet against Californian real estate. But it's more than that. If Joe has sold off all its best land first, then what's left isn't very good. DDMG may be a good short because visual effects is not a great business. A lot of very good special effects houses (private businesses) go bankrupt from time to time (e.g. Orphanage, CORE, Asylum, etc.). Though this may mostly be specific to doing visual effects for movies. Commercials are ok but none of those companies are publicly listed (and they're really small). (I am not short DDMG.) IMAX is an ok short. Once they saturate their network then it's unclear how they are going to make profits. (They are maybe a third of the way there.) A fifth (probably less now) of their customers aren't paying on time... though I don't know if I am being overly optimistic because I am short Imax. KBH is overvalued on a P/B basis and they aren't as well managed as TOL/LEN/NVR. I shorted this in the past, but I am not short it anymore. I think that most of their old losses should have been recognized for now; in the past after the housing crash, their communities weren't selling but they were capitalizing interest and not writing down their communities so book value was inflated. High short interest like HOV. GORO: http://thestreetsweeper.org/undersurveillance/Will_GORO_Ever_Find_That_Magic_Pot_of_Gold_ I am short this. The borrow is really ugly. JCP: I am not short this... but probably will if it rallies. It looks like they have the worst managed stores in their retail space. The free haircuts and upselling on the haircuts goes against their 'honest' pricing strategy. Read the comments on their Facebook page. A lot of Ron Johnson's ideas should have been tested on a smaller scale before being rolled out. This is a huge, huge mistake. Even Sam Walton made mistakes as a retailer (read his book)... but the important thing is to not let mistakes hurt you a lot, to learn from mistakes and to constantly tinker. The store remodels is another example of testing things on a small scale first. This is absolutely nuts. It's just so weird that the Apple stores are one of the best retail operations around yet JC Penney is so awful. Independent oil & gas: Apparently this sector is like airlines. I need to do more research here, but there may be names with negative free cash flow playing the inflated PUD (proven undeveloped) reserve game. I shorted ATPG in the past. Junior mining: This sector is a huge destroyer of capital, even in a commodities bull market. Anybody have good ideas on shorting this? AAB and PNP (Pinetree) may trade at large premiums to book value one day... but they are trading at large discounts right now. G&A is a huge drain on both companies. Pinetree is a better short because it is diversified. Maybe short GDXJ if/when it gets close to its all time highs? I don't think it matters too much to salespeople if you pay them in cash or shares. But CRM paying employees in shares is really smart as it is a phantom method of selling stock at high prices. And I don't think you want to short smart people.

Thinking aloud here... A pattern that I have seen is that sometimes a founder leaves his company, the successor runs it into the ground, then the founder comes back to turnaround his/her baby. Usually the founder coming back is a great turnaround story and the share price goes up a lot. Examples: IDT - Howard Jonas; up over 7X since he came back JEC AAPL - Steve Jobs Does anybody know of any companies where a similar situation is playing out? Here are some vaguely similar situations (to me, they aren't the same): DELL - Michael Dell returned to the company full-time. However, the stock price performance hasn't been stellar. I believe that it is mainly due to competition squeezing profits out of the computer market. BBY - The founder doesn't want to come back as CEO; rather, he wants to take over Best Buy in a private equity bid.