Bernd Ondruch and Mark Hiley: Tales from the Frontlines of Short Selling
Bernd Ondruch, founder & CIO of Astellon Capital Partners, welcomes Mark Hiley, veteran short-seller and founder of The Analyst, for a wide-ranging conversation about the subtle and challenging field of short selling. Ondruch and Hiley recount war stories from previous shorts such as Wirecard, Asian Bamboo, and NMC Health, sharing their techniques for spotting red flags ranging from dodgy accounting to non-existent factories. Hiley and Ondruch weigh in on the common challenges short sellers face, such as margin calls, defiant long-only investors, and guileful misrepresentations by management. Lastly, after reflection on the strictures placed on short sellers under the new regulatory regime of Markets in Financial Instruments Directive II (MiFID II), Hiley and Ondruch impart some advice to investors who dare to dabble in this delicate art. Filmed on November 30, 2020. Key learnings: Identify the duration of your trade as some shorts require years to play out. Contrastingly, know when to get out. Be wary of crowded shorts as well as companies who appear to grow a great deal – it is often easier to short the value traps (unless, of course there is truly fraudulent accounting at play). Lastly, field work is incredibly important as that’s one of the last activities that computers can’t do themselves.