Activist Short Sellers Have Biggest Impact At Smaller Companies – The Best Companies To Short by Activist Insight

Smaller companies deliver the best results to activist short sellers

More than one-third of companies with a market capitalization of under $250 million saw their share prices halve following an activist short selling attack in the past year, research by data provider Activist Insight found.

Activist Short Sellers
Image source: Wikimedia Commons
Activist Short Sellers

Data compiled by Activist Insight from 208 activist short campaigns between 30 September 2015 and July 26 2016 indicated that 38% of companies with a market capitalization of under $50 million saw their share prices drop by 50% or more, while 33% of those with a market capitalization of $50-250 million saw share prices halved or more.

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Companies subjected to activist short seller reports (30.09.15 to 26.07.2016)

Large cap Mid cap Small cap Micro cap Nano cap Grand total
27 48 101 24 8 208
13% 23% 49% 12% 4% 100%

By contrast, the proportion of large cap (over $10 billion market cap) and mid cap stocks ($2-10 billion market cap) that were similarly effected was only 7% and 8% respectively.

Of the universe, the most popular range for short selling was small cap stocks ($250 million to $2 billion), which made up 49% of the targets. More than one-quarter (26%) of these saw their values halved following a short seller report.

Impact on stock price of activist short seller reports (30.09.15 to 26.07.2016)

Large cap Mid cap Small cap Micro cap Nano cap
Below 50% drop 25 44 75 16 5
Above 50% drop 2 4 26 8 3
Above 50% drop
(out of total)
7% 8% 26% 33% 38%

Activist Insight – which acquired fellow database provider Activist Shorts Research in July – recently featured the data in its magazine, Activist Insight Monthly.

Commenting on the data, Activist Insight spokesman Josh Black said: “Smaller stocks are particularly popular with short sellers, who argue that they are under-scrutinized and more susceptible to fraud. This data suggests that they are also more vulnerable to short selling attacks, which may be another part of the appeal.”

About Activist Insight

Since 2012, Activist Insight has provided its clients with the most comprehensive information on activist investing worldwide. Regularly quoted in the financial press, Activist Insight is the trusted source for data in this evolving space. In 2016, Activist Insight launched Activist Insight Shorts after acquiring Activist Shorts Research. Activist Insight offers three great products: Activist Insight Online, Activist Insight Shorts and Activist Insight Monthly – the world’s only magazine dedicated to activist investing.

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