The shorts have been performing well so I’m topping up again.
music selection: “What Difference Does It Make?” — The Smiths
Avis Rent A Car (CAR) fell another 3.5% yesterday and it’s time to top up again. I sold short another 10 shares at 25.28 to bring my exposure back to 2,500. I’m up 637 dollars so far.
Hertz (HTZ) cratered over 11% yesterday which is what prompted me to go back to the trough this morning. I sold short another 56 shares at 11.04. I am up 2,360 in HTZ so far.
I initiated a new short position this morning in Ford Motor Company (F). I sold short 457 shares at 10.941 for 5,000 worth of exposure. This play is on the same theme as CAR, HTZ, and GM; the bubble in subprime auto lending has to pop which will deflate used car prices. GM and Ford will both find themselves with tons of returning leases that are not worth their book value just as new car sales are in cyclical decline.
GM remains 395 dollars in the red. CNQ on the other hand has improved to 8 dollars in the black. My total return on short positions is 2,608 as of yesterday’s close. That is on 16,000 worth of exposure since 10OCT2016 or 27.75% annualized.
Some people don’t like to short stocks because they think their upside is limited to 100% as the shares can not fall below zero. I think it is important to note you can make MORE than 100% on a short if you are diligent about topping up exposure as prices fall. HTZ is down 70% since I initiated. But I am up 94.4% on the position thanks to piling on the stock experiences misery. I think my 27.75% return so far is excellent considering I also get leverage and hedging as a bonus to the positions.
Devour your prey raptors!