There's a whole lot of hedge funds out there trying to short stocks. Add to that a growing number of mutual funds and even individuals as well as a rising market, and you've got a really tough environment in which to short. Just borrowing the shares is tough. That's one reason why hedge fund Keel Capital Management shuttered itself. The lack of short opportunities made it hard to stick to its parameters. So what to do? According to MarketWatch, more funds are experimenting with shorting exchange traded funds. Right now, there are no fewer than eight ETFs with short interest that exceeds the number of shares outstanding. My guess is that it will be hard to short ETFs pretty soon.
Our take on this news: This is a sheer sign of the desperation of the hedge fund industry. Their heydays are numbers by both the growing global economy and soon-to-be stricter regulations.
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