So how do you recognize legitimate shorting versus
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First, real short sellers don’t hide behind anonymous Internet chat boards and cutesy names. They don’t have multiple email accounts to engage in rumor mongering. And they don’t have websites registered in Panama that have been through nine changes hosted on seven different name servers over the past eight years. That’s because guys like George Soros, Simon Cawkwell, Mark Cohodes, and Jim Chanos – some of the most famous legitimate and successful short sellers of our time don’t need to. They’re idea-driven.
Second, real short sellers don’t want attention. In fact, they want the exact opposite – not to tip anybody off so that they have an extended period of time to maximize their positions. “Short and distort” sellers typically use high volume activity to drive prices down quickly in their own self-interest rather than see them collapse under their own weight.
Third, real short sellers publish factual information if they publish anything at all. Short and distort artists string together information that may or may be germane, let alone accurate under the guise of personal opinion that makes it hard to prosecute. They rely on selected information that is taken out of context or partial truths and inference. Ethics have very little to do with how they play the game. Their sole interest is in creating short term angst that causes investors to bail so that they make money buying depressed shares.
Obviously, this is not pleasant for anybody. Short and distort artists prey on panic. They have a demoralizing effect that can hurt not only individual investors but also the companies they target by slowing down financing and growth.
Believe it or not, though, there is a silver lining.
Sometimes short sellers get burned by their own mojo. If enough people come back into a stock, that pressures the short sellers who are then forced to cover at higher prices in something called a “short burn.” The irony is that many times it’s their own actions that light the fire.
The other thing to think about is that if you buy off on the targeted company’s potential – in this case Ekso – a short attack can be a super time to pick up shares that are temporarily “on sale.