The Secrets of the Short Seller Part 2: The Blueprint for Strategy & Survival

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Jul 28, 2025

Brad Safalow, a seasoned short seller and founder of PAA Research, dives deep into the world of short selling and its intricate market dynamics. He shares valuable insights on identifying short opportunities, highlighting specific cases like Freshpet and Trupanion, and the emotional hurdles faced in the process. The discussion sheds light on risk management and strategic analysis, providing a blueprint for navigating the challenges of short selling in today's market. Safalow's expertise offers a fascinating glimpse into the complexities of this investment strategy.

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INSIGHT

The Four Ps of Short Selling

Understanding the 'Four Ps' helps predict stock behavior in the current market.
These include passives, processors (algos/quants), pods, and positioning.

INSIGHT

Impact of Gamma Squeezes

Options positioning can cause sharp stock moves through mechanisms like gamma squeezes.
Retail investors often drive these squeezes, impacting heavily shorted stocks significantly.

INSIGHT

Ranking Short Sell Targets

Secularly challenged businesses are the most promising shorts, followed by unsustainable trends, cyclicals, and frauds.
Frauds can persist longer than expected, causing wounds even for experienced short sellers.

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In this episode, Steve Eisman interviews Brad Safalow, a seasoned short seller, discussing the intricacies of short selling, market structures, and specific case studies of companies like Freshpet, Trupanion, and Kinsale Insurance. They delve into the criteria for identifying short opportunities, the challenges faced in the current market, and the lessons learned from both successful and unsuccessful shorts. The conversation emphasizes the importance of understanding market dynamics, risk management, and the emotional challenges of short selling.

Subscribe to The Real Eisman Playbook on Apple Podcasts: https://podcasts.apple.com/si/podcast/the-real-eisman-playbook/id1818671690

Chapters
00:00 Introduction to Short Selling and Market Structure
03:30 The Four P's of Short Selling
06:40 Identifying Short Opportunities: Criteria and Categories
09:20 Case Study: Freshpet - A Short Thesis
18:30 Case Study: Trupanion - Analyzing the Short
22:40 Case Study: Kinsale Insurance - The Cult Stock
34:20 Lessons Learned from Short Selling

Learn more about Brad Safalow here https://www.pleaseactaccordingly.com/

Connect with Steve Eisman and access all things The Eisman Playbook: 🌐 https:// linktr.ee/eismanplaybook → Follow on socials, watch episodes, and get the latest updates — all in one place.

Disclaimer: The financial opinions expressed are for information purposes only. The opinions expressed by the hosts and participants are not an attempt to influence specific trading behavior, investments, or strategies. Past performance does not necessarily predict future outcomes. No specific results or profits are assured when relying on this content. Before making any investment or trade, evaluate its suitability for your circumstances and consider consulting your own financial or investment advisor. The financial products discussed in ‘The Eisman Playbook' carry a high level of risk and may not be appropriate for many investors. If you have uncertainties, it's advisable to seek professional advice. Remember that trading involves a risk to your capital, so only invest money you can afford to lose. Derivatives are unsuitable for all investors and involve the risk of losing more than the amount originally deposited and any profit you might have made. This communication is not a recommendation or offer to buy, sell, or retain any specific investment or service.

Copyright ©2025 Steve Eisman

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