Hello,
As we know, short positions require more conviction and are more likely to be a made by a sophisticated investor, as they are borrowing money to keep the position open. Research has also shown that investors engaging in short selling typically focus on valuations and fundamentals more than the average investor.
I was wondering if any of you guys use short interest as a metric to value stocks and if you do not, what are you thoughts?
For example: not opening a position on stocks with more than 5% short interest.
I was thinking of backtesting a strategy that goes long bottom quintile and goes short top quintile and i was wondering if it is worth the time.
Let me know your thoughts.
