- Dead Companies Walking – first published in 2015 – offers interesting insight into the mentality required by short sellers
- Investors pondering the current market irrationality would do well to pick up a copy
Michael Burry, who Christian Bale portrays as the investment world’s answer to Batman, has caused a stir following his recent decision to short Tesla (US:TSLA). Many investors cricked their necks earlier this month after Scion Asset Management purchased put options on 800,100 shares worth over half a billion dollars, wondering whether should they be following suit. Somewhere that they might turn to help them decide is Scott Fearon’s highly acclaimed book, Dead Companies Walking: How A Hedge Fund Manager Finds Opportunity In Unexpected Places.
The tome – first published in 2015 – reveals how to tell when a company is sliding toward bankruptcy, regardless of the stock price, and how to profit from it. Fearon identifies a number of common errors made by both private and institutional investors when picking shares. These include a heavy reliance on basic metrics and formulas, misunderstanding target customers, failing to adapt to industry shifts and remaining physically or emotionally removed from a business’s operations. Identifying and removing those errors can help investors avoid the pitfalls of poor stock picking.