Seminar (Dept. of Finance)

Title: Short-Selling Hedge Funds

Speaker: Baozhong Yang, Associate Professor, Robinson College of Business, Georgia State University

Time: 10:00-11:30, April 12, 2024(Friday)

Venue: Online Meeting

Language: English

ABSTRACT:

Using a unique approach to identify hedge funds engaged in short-selling, we uncover that short-selling hedge funds exhibit superior performance and distinct trading behavior. Short-selling hedge funds outperform other funds by an average annual abnormal return of 4.9%. Short hedge funds are larger, hold more puts, and exhibit a higher portfolio turnover rate. The superior performance of short hedge funds is largely orthogonal to known hedge fund skill measures. Short-interest, long equity trades, and put positions all reveal that these hedge funds typically trade in opposition to retail trading moves, providing a potential source of the funds’ abnormal performance. Notably, in the aftermath of the 2021 Meme Stock phenomenon, short-selling hedge funds markedly scaled back their positions against retail trades, especially in stocks with heightened sentiments on Reddit’s WallStreetBets, indicating a pivotal shift in hedge fund trading strategies.

SHORT BIOGRAPHY:

Baozhong Yang is an Associate Professor of Finance in the Robinson College of Business, Georgia State University. His research interests center on FinTech, Corporate Finance, Investments and Asset Pricing. He has published papers in Journal of Accounting Research, Journal of Financial Economics, Journal of Finance, Management Science, Review of Financial Studies and etc.