Such acrimony was recently illustrated by a huge spat between the British company Quindell and the American investor Gotham City Research.
Short selling need not involve attacking a business; it can be part of a magic potion that makes money irrespective of whether markets move up or down. This can be as simple as believing that Shell is cheap relative to BP. If we were convinced of this, we could short BP and buy Shell. All that is needed thereafter is that Shell’s share price rises more or falls less than BP. If correct, the trade makes money irrespective of the direction of markets. And that’s magic.
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Jim Wood-Smith is head of research at Hawksmoor Investment Management
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