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Successful Investors

Kingsford Capital, a Short-Only Case Study

Is alpha on the short side a myth? This is a timely question considering how this market cycle’s bull run is growing long in the tooth. Investors increasingly inquire about shorting, while their managers often lament the challenge of making money on individual short positions. Taking high conviction short bets is too risky, and they frequently opt for index hedges instead.

On the other hand, one of the main criticisms investors voice is the lack of shorting for alpha generation purposes. From reviewing hundreds of portfolios, we can attest that few long/short equity managers consistently generate alpha on the short side. As with everything, however, there are exceptions. This case study unpacks the investment process of Kingsford Capital—a dedicated short-only manager. Kingsford employs a bottom-up investment process that identifies single stock shorts, regardless of sector, and sells them with the aim of benefitting from their decline.

In this case study, we use Kingsford’s private data from 2008 to present in order to understand how they’ve outperformed. Download this report to learn more.