Sep 18, 2023
Send entries to [email protected] by midnight Sept. 30. If you prefer old-fashioned mail, write to John Dorfman, Dorfman Value Investments, Suite 1900, 101 Federal Street, Boston, MA 02110.
Winner in My Short-Selling Contest Chooses Anonymity
In 20 years of running the annual Short Sellers Dont Have Horns short-selling contest, Ive never had a winner request anonymity.
Until now.
The winner, whom I will call Sam, is a 22-year-old stock analyst who recently earned a masters degree in finance from a college in the Boston area. His selection, FaZe Holdings Inc. FAZE, declined 97.7% in the contest period, from Sept. 30, 2022 through Sept. 8, 2023.
That means Sam had a theoretical 97.7% profit, since short sellers gain when a stock declines.
FaZe provides financing to help people put games and other content on the internet. In return, it gets a cut of their advertising revenue. The company lost $28.4 million in the first two quarters of this year on revenue of $34.2 million.
Sam declined to have his name revealed because he recently secured a job as a stock analyst and was unable to reach his firms compliance officer to get permission to be quoted in public.
For the next contest, which begins on Sept. 30, Sam says he would sell short MSP Recovery Inc. LIFW, which seeks to identify claims paid by Medicare or Medicaid that should have been paid by other parties such as auto insurers or workers compensation insurers.
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The firm was founded by John Ruiz, a trial lawyer, and went public by merging with a SPAC (special purpose acquisition company, also known as a blank-check company). The stock is down 86% in the past year and traded for just 19 cents a share as of Sept. 15. Sam thinks it will go to zero.
Six-time winner
Laurent Condon, a professional trader in Saint Rambert en Bugey, France, placed second with a 96.7% gain in Camber Energy Inc. (CEI). That was the very same stock with which he won the contest in 2021-22.
Condon has won this short-selling contest twice and placed third once, before his second-place finish this year. He has also placed first and third in my traditional stock-picking contest. That means he has won honors six times in my contests. No one else has come close to that.
For the coming years contest, Condon picks WeWork Inc. WE as his short. My expectation, he says, is that the company will go bankrupt. The business has never been profitable and the balance sheet shows a dangerous picture with way too much debt in a high rate environment.
WeWork describes itself as a commercial estate company that provides flexible workspaces for technology startups and other tenants.
Third Place
In third place this year was Holt Livesay, a retired banker and real estate investor. His short pick, LL Floorings Holdings Inc. LL, declined 53.7%. The company was formerly named Lumber Liquidators.
Livesay lives in Franklin, Virginia, and LL Floorings is based in nearby Richmond, Virginia. Its almost a home-town stock for me, he said. I had bought it a couple of times and lost money. Im still rooting for the firm, but theyve been struggling ever since going public.
Ten people entered the contest this year and seven of them succeeded in picking a stock that declined. That was a very good showing, since the Standard & Poors 500 Total Return Index was up about 26% in the contest period Sept. 30, 2022 through Sept. 8, 2023).
You can play
You are cordially invited to enter my 21th annual Short Sellers Dont Have Horns short-selling contest.
Pick a stock that you expect will decline a lot from Sept. 30 of this year through Sept. 13, 2024, when the contest ends. You are not required to sell short the stock with real money, but it is OK if you do.
The winner will receive a gift having something to do with the word short. Past prizes have included an album by pianist Bobby Short, a book of short stories and a strawberry shortcake. Second and third place carry no prize but glory.
To enter, please give your name, home city, phone number, email, the name of the stock you think will fizzle and its stock symbol. It must be a U.S.-based stock. Please include a weekend as well as weekday phone, as I may need to interview you over the weekend.
You are not required to give your reasons, but I appreciate it if you do.
Send entries to [email protected] by midnight Sept. 30. If you prefer old-fashioned mail, write to John Dorfman, Dorfman Value Investments, Suite 1900, 101 Federal Street, Boston, MA 02110.
John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at [email protected].
