For our clients with short portfolios we also use fundamental, quantitative, and technical analysis but at the opposite end of the spectrum from our long portfolio stock selection. Here we use our technical and quantitative screens to identify high relative valuation companies where on the margin revenues and/or earnings are decelerating and starting to disappoint, where the stock price is starting to roll over and break through support levels and where money flows are decidedly negative and, judging by the institutional shareholder list, money flows could stay negative for quite a long time.
Our fundamental analysis looks for financial statement strains, changes in the competitive landscape, changes in a company’s ability to control pricing, missed product cycles and general deterioration in earnings visibility.