IMO - About shorters and BT1 Feb 2021 22:03
Well, that was such a good performance today, the minimum I'd expect tomorrow is a bullish continuance of that performance.
---------------------------
SHORTERS:
I've often wondered why the professional hedge fund shorters have studiously avoided what with hindsight, has been such an easy, easy, money-making shorting opportunity over the past near-5 years, in BT.
The answer to why-not, is immediate when you consider the makeup of the big hedge fund shorters. They're some of the sharpest operators around. They aren't fools.
An old video I once watched, showed a room full of wannabe merchant bank traders in a lecture given by a former merchant bank floor manager - Amongst the many questions he was asked was - whether the best option was to accept an all performance package or a salary package.
They were advised to accept a salary option as high as they could get it with the remainder made up of a performance bonus - and not the other way round.
He went on to explain why dreams of avarice were not for the many, so a larger % salary is the best option, with the performance bonus aspect being the smaller part of the contract. It's what he said in expanding his answer that reveals why BT has never been shorted professionally large scale.
He said the best paid traders work for the big hedge funds and if ever fortunate enough, always take the hedge fund job as what they pay will dwarf the merchant banks.
But competition is fierce beyond belief. Only the top year Harvard graduates and the like etc., ever make it to the interview - let alone succeed in getting chosen.
It would have been "easy" to earn a fortune in BT's giant fall in price would it not?
EASY?
The reasn why not, is because those best of the best hedge funds don't gamble per se, they load the odds in their favour and choose IN THEIR OPINION grossly overvalued companies who's real fair valuation is often in their view 0.0 pence!
It doesn't take a Harvard hedge fund trader to evaluate that BT has never been over valued at any time in the past 5 years.
In other words, at any time in the last 5 years BT could (could) have been re-rated upwards to fair value, by the market in any single trading result that showed increasing earnings.
As BT was not over valued, the risk outweighed the reward. Hence the shorters have not been present in enough strength to come up on the regulatory authorities 0.5% ceiling awareness radar.
And that's why I think the big pro shorters never dared take the risk in shorting BT. Because BT was never overvalued, or overhyped, so even if as proved the case, BT never came in with a storming or impressive increased earnings result - they were under valued by the market at all times, regardless.
In a way, by the market by not rating BT at a fair value means - did they inadvertently, as a by-product of undervaluing BT, have the effect of protecting BT from shorters all these years?
IMO.
Sign In
Follow the stocks
