SST
Short Model
What is SST Short Model?
The Special Situations Trading (SST) Short Model is our proprietary framework focused on identifying and capitalizing on businesses exhibiting signs of shareholder value deterioration or fraudulent activity. Our approach is built around high-probability short opportunities that are triggered by fundamental developments or catalysts signaling deeper trouble within these companies.
What we look for...
01
High Probabilty of Financial Distress
We target companies facing significant financial strain, such as excessive leverage, declining cash flow, unsustainable business models, or exposure to market conditions that jeopardize their ability to stay solvent.
02
High Probability of Accounting Manipulation
We also zero in on companies with questionable accounting practices, where manipulation or aggressive financial reporting may be masking underlying weaknesses. These businesses often exhibit red flags, such as inflated earnings, unusual asset valuations, or inconsistencies in cash flow reporting.
03
Catalyst-Driven
While our screening targets companies facing financial or accounting difficulties, we wait to take action until a clear fundamental catalyst emerges. These triggers often include negative earnings announcements, financial restatements, credit rating downgrades, liquidity crises, legal investigations, whistleblower reports, or major corporate restructurings and layoffs that signal deeper issues. .
* Backtest Results (ExcludesTransaction Costs and Taxes)
[1] Alpha is calculated utilizing Capital Asset Pricing Model (CAPM).
[2] Calculated using the latest three years of monthly returns for the portfolio.
[3] Risk-adjusted return of portfolio over the past three years. It is calculated
as the annualized result of the average monthly excess return divided by its
standard deviation over the past three years. Monthly risk0free rate (10-Yr
U.S Treasury Constant Maturity Rate) is used as refernece rate.
[4] Risk-adjusted measure with downside risk as primary risk concern. Calculation
variables are maintained to methods used for [3].