‘Ottawa’ Five Ways Companies Can Combat Short Sellers
A while back, we penned a column on how to choose a stock that was unlikely to be a target of a short-seller attack. This week, we are going to discuss the various strategies companies themselves can use to fight off the short sellers. Canadian companies have used all of these tactics in the past few months. Now, we don’t think that companies should specifically target short sellers in their business practices, but we cannot argue against some of the results that have been achieved by the companies below.
Make a solid acquisition
Alaris Royalty (AD on TSX) was the target of short selling by hedge fund Broadview Capital last year, which questioned the valuation of its investments, among other concerns. In response, Alaris simply went about its business of acquiring royalty interests, and in early April provided $30 million (USD) in financing to Providence Industries in exchange for ongoing royalties. Alaris stock this year is up 32%, providing some serious pain for the holders of 745,000 in shares of the company shorted.