A lot of people are celebrating activist short seller Andrew Left’s conviction for securities fraud. This might shock you, but I’m kind of bummed.
Basically, Left was doing the old short and distort. It’s one of the oldest plays in the book. Read on to understand how it creates opportunities for longs…
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Table of Contents
The Big Picture
Now, I’m not recommending anyone do this. But to understand why I’ll miss Andrew Left, you need to know…
How the Short and Distort Works
First, an activist short seller takes a short position. Then they write a 10,000 word diatribe of nonsense.
They post on social media telling everybody that they’ve done a ridiculous amount of research and the stock is going to zero. Then, they publish the diatribe.
Everyone panics and sells the stock, which obviously pushes the price lower.
Now, that research could be like Jack Torrence in “The Shining” where it’s literally gobbledygook. But if it scares the stock down, the short seller covers, makes great money, and moves on.
Death of the Short and Distort Dip Buy
Again, I’m going to be bummed.
Every one of these tech high flyers that Andrew said was going to zero would dip for half the day. By the end of the day or the next day they’d be all the way back where they started. Then they’d go on multi-day runs. Sometimes they’d go on epic multi-month runs.
Why?
Because so many naive people followed short and distorters like Andrew Left. They believed every word of nonsense. They weren’t short before the short and distort. But they got short after it was published. So, they shorted into the dip. Then they got trapped and got their faces ripped off.
This is not a recent thing, it’s been going on for years.
My Take
All these plays were just incredible dip buy opportunities. For the past five or ten years these have been layup trades. Now, that’s gone away.
I’m glad justice was served. But I’m sad the layup trades are gone. Every one of these stocks would eventually bounce back. Usually, within a few days (if not later the same day). Then they would go on an epic short squeeze for weeks, months, and sometimes longer.
If you play with fire, you get burned.
Watchlist
Laser Photonics Corporation (NASDAQ: LASE) announced on Tuesday (June 2) that it was “invited to participate in an exclusive one-on-one technical exchange with government engineers from the MEIA Missions, Capabilities, and Analysis Team at the upcoming Industry Technical Exchange Meeting.” The Breaking News guys alerted it as soon as the news hit.
LASE, 6/2/26 to morning session on 6/3/26 drone play
LASE stair-stepped its way to a 6-month high before consolidating. On June 3, it had a nice premarket continuation. It was also on my Tops list in Premarket Prep, hit the Oracle signal, and broke major resistance before pulling back. Keep an eye on this one as drone plays are in the news.
On My Radar
- Anthropic expanded “Project Glasswing” to 150 organizations.
- The move comes one day after Anthropic filed Form S-1 to the SEC, setting up a second trillion dollar IPO this year.
- There’s gold in the old: Gold is once again central banks’ favorite investment.
- This could affect gas prices but the doomer narrative reads like something from the Panican Playbook.
- Today the PDT rule is officially gone. Watch this to understand what’s coming in the next few weeks and months.