Short selling is a tough way to make money

Stocktake: Leading money manager Bill Ackman won’t risk shorting Adani Group even though he is impressed by damning report

Billionaire money manager Bill Ackman was impressed by Hindenburg Research’s aforementioned report on Adani Group, describing it as “highly credible and extremely well researched”, but he’s not tempted to short the Indian company.

Ackman famously bet against nutritional firm Herbalife in 2012, describing it as a pyramid scheme. He stands by that description and Herbalife shares are now below his 2012 entry point. However, Ackman is no longer short the stock, closing the trade in 2018 after losing $1 billion (€910 million).

Ackman enjoyed more success after US bond insurer MBIA ran into trouble in 2008. However, shorting MBIA was similarly stressful. Regulators initially investigated Ackman for market manipulation. He was eventually vindicated, but the trade, which was initiated in 2002, took years to pay off. Ackman swore off activist short selling for good last year, and one can see why. Shorting requires good timing. You run the risk of unlimited losses. As Ackman tweeted recently, short selling “is not a good way to make money, but it does make for good documentaries”.

Proinsias O'Mahony

Proinsias O'Mahony

Proinsias O’Mahony, a contributor to The Irish Times, writes the weekly Stocktake column