When Sahm Adrangi first founded Kerrisdale Capital, the stock market had just started to take the bullish path that it’s been on for years. Despite the rise, he still took his chances with betting against stocks along with a few other investors. While the stock market may have risen by 22% in 2017, Kerrisdale Capital and Sahm Adrangi still managed to see their portfolio rise through short selling and hedge funds by 20%.
While Kerrisdale has had a lot of success and seen plenty of profits, the same cannot be said for every investor engaging in short selling. When the market is flat, short sellers don’t have as much risk as they do when it is bull. If they do not get their methods correct and go off of bad ideas, they can watch their portfolio lose value quickly.
Sahm Adrangi may be good at what he does, but that doesn’t mean that he hasn’t seen his fair share of problems. When it comes to shorting if done wrong an investor can lose more than what they put into it. In one case that he recalls, a bad investment led to a loss of 200%. This risk is one of the reasons why some investors avoid the practice altogether.
One of the ways that make Sahm Adrangi different from many of his peers is his methods of value investing. When he makes the decision to short, he also goes public to speak and debate about the merits and business practices of the company. Other investors see credibility in the reports published by Kerrisdale Capital due to their years of good investments and get to discussing it and investing on their own. While it’s possible to see profits while keeping your opinions quiet, it’s much more difficult.
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While some people look at short sellers like they are cynics, Sahm Adrangi doesn’t see his business that way. Kerrisdale Capital isn’t looking at the stock market overall when they are making their financial decisions. Instead, they are examining individual companies and investing in businesses in a way that pays off when they just don’t work out.