The value of short-sellers in financial markets has been hotly debated for a long time. Some question the validity of the means by which investors with large short positions go about "preaching the gospel" with respect to the various sins of the offending management teams or business models underlying the businesses these investors are shorting.
Others, however, point to the fact that short-sellers tend to provide a tangible service for financial markets in that these short-sellers do a significant amount of research and price discovery, essentially speeding up the whims of capitalism, allowing poorly run companies to exit the marketplace quicker, making room for well-run businesses to fill the gaps left behind.
Of late, Badger Daylighting Ltd. (TSX:BAD) has been in the cross-hairs of famous short-sellers such as Marc Cohodes, who has recently put up a website describing all the problems Cohodes sees with Badger’s business model and specifically the management team behind the operations. One of Cohodes’ key outlooks on shorting companies is to "bet the jockey and not the horse."
Investors interested in learning more about the short thesis on Badger should go to www.turnoutthebadgerdaylight.com.
For those long on this stock, it may be wise to review the information presented with an open mind and decide whether Badger is a company worth holding onto for the long term. With Cohodes’ track record of targeting Canadian companies that have crashed such as Concordia, Valeant, Home Capital, Equitable (to a lesser extent) and others, it may be wise to sit this one out.
