Wednesday, March 3, 2010

Bookkeeping: Short Greenhill & Company (GHL)

At this point it is difficult to short anything, and whatever is to be shorted cannot be on fundamental reasons since some of what I consider the most troubled sectors of the economy are the areas roaring the most.  So it is not like 2007 or 2008 where you can say "the consumer is shot" and go short Harley Davidson or a retailer, or las vegas casino at will.   Hence I will just be looking for weaker charts...

We have not done an individual short in an equity in a while, but Greenhill & Co (GHL) has a nice entry level, where if we are wrong we can exit with a smallish loss.  I am shorting a 4% allocation in the $76.40 area.  With the 200 day moving average just above at $77.30, I will use that as my stop loss and give HAL9000 a little area of buffer so as to not take my order away, and place the stop loss around $78.20.  This will limit our loss to 2.4%.

The chart tells the obvious story of why this is being shorted; in fact any stock that has not jumped over at least its 200 (or 50 day) moving averages in the past 2-3 weeks has to be questioned.   I actually like this company - we were long last year on this name but it's a technical call; hopefully we can revisit recent lows closer to $70, which would be a decent place to cover.

Short Greenhill & Co in fund; no personal position

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