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James Montier Short List Stock Screener
Use this stock screener to select a list of overvalued stocks for short selling using the strategy described in James Montier's recent book: "Value investing techniques for intelligent investment".
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James devoted part of this book to short selling because he claims that short sellers are fundamentally like-minded individuals but they look at stocks in from the opposite perspective. This enables one to establish a hedge strategy by going long on good value stocks while going short on overvalued stocks.
In the chapter "Joining The Dark Side: "Pirates, Spies and Short Sellers", he offers 3 criteria for selecting short candidates:
Price-to-Sales > 1 |
"Price-to-Sales is fine if you are looking for short candidates, but as a long side value criteria it makes no sense to be at all. After all as long as you promise to value me on price to sales, I’ll set up a business selling $20 bills for $19…I’ll never make a profit, but if you are looking at price to sales you won’t care." |
Piotroski F-Score 0-3 |
To separate the winners from the losers. |
Total Asset Growth > 10% |
Capital discipline. |
The article gives his reasoning for the screen, the evidence for why each of those picks out poor performing stocks as well as evidence that the portfolio does worse than the market in many years. Also our own backtests on this strategy indicates that the strategy works. But keep in mind that short selling is only for experienced investors. This particular screen there are also a lot of story stocks (Biotechnology , gold exloration stocks).