This episode dives into the world of short-selling and activist investing with guest Edwin Dorsey, the writer behind The Bear Cave Substack. Edwin tells CJ the story of how he made a name for himself by exposing wrongdoing at Care.com and how this inspired his current writing career. He goes on to explain how short selling works and what differentiates it from long-only investing, before talking about how he researches corporate misconduct, the clues he looks for in consumer industry reports, and other red flags apparent in the actions of management, auditing firms, and board members. He also discusses what it means for employees when an activist investor takes a stake in your company.
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@cjgustafson222 (CJ)
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TIMESTAMPS:
(00:00) Preview and Intro
(02:35) Sponsor - NetSuite | Mercury
(05:16) The Care.com Story That Put Edwin on the Map
(09:43) The Genesis of The Bear Cave
(13:09) An Introduction to Short Selling
(16:29) Sponsor - Maxio
(17:39) Betting on Binary Outcomes
(20:38) What Edwin Looks for in a Short Sell
(24:16) Management Turnover as a Short Sell Signal
(26:31) Red Flags Relating to Auditors
(31:35) Corporate Fraud and Financial Misconduct Red Flags
(41:13) Financial Statement Mishaps
(44:36) Why Edwin Watches Board Members Over CEOs or CFOs
(48:07) Activist Investing: What It Means for Employees
(53:33) A Parting Story on Exposing Corporate Wrongdoing
(55:27) Wrap
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