The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions (Bloomberg)

How Short-Sellers Ackman, Chanos and Others Dance With Danger

The natural bias of the market is upward, so short-sellers are going against consensus at their own peril when they bet against a stock, said Richard Teitelbaum, author of The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions (Bloomberg). ‘You are also open to short squeezes where long investors gang up, buy up stock and run it up and you are going to be forced to cover over a period of time and that can cost you a lot of money,’ said Teitelbaum. For example, Teitelbaum profiled Bill Ackman of Pershing Square Capital Management in his book.


Ackman made a splash in late 2012 when he announced his Herbalife short, sending the stock plummeting to what seemed like an easy victory and substantial profit. Unfortunately for Ackman, Herbalife fought back with vigor. Other hedge fund managers like Carl Icahn and Dan Loeb jumped into the fray and forced a short squeeze. Not one to back down, the billionaire hedge fund manager vowed to ‘take it to the end of the earth’ and that battle continues to rage on. ‘Herbalife was very successful in attracting people who disagreed with Bill Ackman,’ said Teitelbaum.

Teitelbaum refers to Jim Chanos, president and founder of Kynikos Associates, as the ‘dean’ of short-selling. Chanos sold short shares of energy trading giant Enron throughout 2001, increasing his short position as more information about its sketchy dealings surfaced. Kynikos pocketed a huge sum from its Enron short and Chanos became well known for his early detection of Enron’s problems. ‘He identifies different short situations that he can profit from and he is very good at executing,’ said Teitelbaum.

The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions (Bloomberg)


The Most Dangerous Trade serves up a range of fascinating tales from the underbelly of the global marketplace. Investigative journalist Richard Teitelbaum reveals how short sellers navigate the darker side of events—the miscalculations, fraud, and follies—that help them profit from the failure of individuals, companies, markets, and nations.

Short sellers are figures of intense controversy who some say operate at the fringe of accepted financial practices. Throughout The Most Dangerous Trade, former New York Times andBloomberg News journalist Richard Teitelbaum profiles more than a dozen short sellers—an assortment of loners, firebrands, cynics, liars, and losers—to reveal how their investments have made and lost them millions and even billions.

The book is filled with stories of successful investments as well as disastrous ventures. The Most Dangerous Trade examines the tactics of well-known short sellers such as: academic and hedge fund manager James Chanos, Herbalife short seller William Ackman, “Demolition Man” Manuel Asensio, and former harness horse racer Doug Kass. The author puts the spotlight on their different strategies, approaches, and various styles as they zero in on their targets, structure trades, and see their investments through to their ultimate conclusions.

Written in a style and pace that could be easily mistaken for an adventure novel, The Most Dangerous Trade shows how these investors seek publicity to help drive down a stock and details the often bitter and controversial battles that ensue.

The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions (Bloomberg) chronicles the serious breakdowns—financial, regulatory, ethical, and structural—that accompany short-selling campaigns, and offers a look at what motivates investors who wager against the stock market.

From the Back Cover


The natural state of a collapsing universe is the breaking down of order. Short sellers understand this and seek to profit from it.
—From the Preface

The Most Dangerous Trade puts high-profile short sellers under the microscope to examine their different investment styles, strategies, and tactics. Based on years of research (and hard-won interviews), award-winning journalist Richard Teitelbaum profiles more than a dozen short sellers including well-known investors such as James Chanos, William Ackman, Manuel Asensio, and Doug Kass. The author includes stories of both their winning investments as well as their financial missteps. The book shows how each short seller researches his or her targets, puts on a trade, and sees the investment through to riches—or failure.

The Most Dangerous Trade offers up a cornucopia of short-selling tales, including the greatest short sellers, the most notable trades, and roiling controversies.

The Most Dangerous Trade: How Short Sellers Uncover Fraud, Keep Markets Honest, and Make and Lose Billions (Bloomberg)

Comments (2)

  • pravchaw

    Great review.

    September 26, 2015 at 1:07 pm
  • Rene E Porcile

    For all of those who doubted and or discounted the fact that Ackman and Pershing Square were being investigated for manipulation of HLF stock read this and weep:

    “This letter responds to your request, dated and received in this office on September 8, 2015, for any documents responsive to the claims that the SEC has investigated market manipulation in Herbalife stock by or on behalf of Pershing Square – the hedge fund run by Bill Ackman.

    We are withholding records that may be responsive to your request under 5 U.S.C. § 552(b)(7)(A), 17 CFR § 200.80(b)(7)(i). ”

    Thanks for the info Bronte Capital…So why does such and obvious fraud need to have it’s stock manipulated by the person who brought the fraud to light?

    September 26, 2015 at 3:03 pm


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