Exited my Textura short

I’m almost starting to look like a day trader… After exiting and rebuying WSP holdings previous week (way to early it seems) I covered my Textura short today after initiating the position less than two weeks ago. The reason for covering is simple: the borrowing costs are quickly going up, and I don’t like to pay a lot of money just to be able to maintain a position. It costs almost 5% annualized to borrow shares now, and this means that the position needs to generate a negative alpha of 5% just to break even. I’m not so sure of my capabilities that I want to bet on that. I prefer jumping over lower hurdles.

Disclosure

No position in Textura anymore

2 thoughts on “Exited my Textura short

  1. GlennC

    5% doesn’t strike me as that much.

    Your Suntech short went up to around 100%. More expensive than credit card debt………..

    (If high borrow rates are the new normal, then this world is messed up.)

    Reply
    1. Alpha Vulture Post author

      It’s certainly possible to pay a lot more than 5%, but I do think that’s not easy to outperform with shorting if you are paying a high borrow. It’s a pretty big headwind to overcome. Especially in a case like this were there is no real catalyst.

      About the Suntech short; I doubt that a lot of people made money by shorting the common. You would have needed some good/lucky timing. I wouldn’t be in that trade if I didn’t manage to lock-in a very low effective borrow rate.

      Reply

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