We’re not sure what’s more shocking: the growing number of non-financial companies added to the list of prohibited shorts or the well-known hedge funds that have opted to stay on the list.
The height of absurdity was reached today when the drug-store chain CVS Caremark Corp (CVS) was added to the list today, with eight other companies. Exactly why they need to be protected under an umbrella opened to shield “financial companies” from the largely illusory terror of short-sellers is, to put it politely, unclear.
Rivaling the scandalous growth of the no-shorting list, however, is the decision of some of the most prominent publicly traded hedge funds to remain on the list. GLG Partners (GLG), Och Ziff Capital Management (OZM) (which, despite its name, isn’t really associated with the Ziff family anymore) and Fortress Investment Group (FIG) remain on the protected list, despite the fact that the hedge funds regularly employ short-selling strategies. Blackstone (BX), which is a hybrid private equity and hedge fund company these days, also remains on the list. Protected from being shorted while shorting others seems a bit like a dream of the Big Rock Candy Mountain. But these are heady times.
The decision to remain on the no-short list is provoking a mix of outrage and mockery in the hedge fund community and market watchers. Perhaps the starkest criticism comes from Greg Newton, who describes those who remain on the list as constituting “the ranks of gutless hypocrites.”
Man Group (MNGPF.PK), the world’s largest publicly traded hedge fund, recently requested to be included on the UK’s version of the no-short list. The fund says it objects in principle to the list but until it is scrapped, it will avail itself of the protection offered.
Earlier this week, three financial firms--Diamond Hill Investment Group pulled itself off the list. Yesterday JMP Securities, and Greenlight Capital Re, Ltd--opted to be removed from the list of protected stocks.
None of the hedge funds or companies that remain on the list and were mentioned in this story would immediately comment.
