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Hedge fund comedy video: Shorts are 'humanitarian aid for poor rich people'

An image from a Kerrisdale Capital video on Vimeo
Source: Kerrisdale Capital | Vimeo

A small but outspoken activist hedge fund manager is hoping to make a big splash next week with a Bill Ackman-style presentation on what it calls the "biggest stock promotion we've come across since Sino-Forest."

To get attention, Kerrisdale Capital released a fictional—and funny—video on the societal value of short sellers.

"I got long China's premier social-as-a-service platform for clean energy social networking. Cha-ching!" a distraught Wall Street trader says sarcastically. "There's no such thing as clean energy social networking in China. How was I supposed to know better?"

The answer, viewers are told, are heroic short sellers—investors who keep overvalued companies in check and are like "humanitarian aid for poor rich people."

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Sino-Forest refers to the Chinese timber company stock that was famously attacked by short seller Carson Block and his Muddy Waters research outfit in June 2011. Block called the stock a fraud because of what he said was sketchy accounting, leading to losses for many investors, including hedge fund Paulson & Co.

Sino-Forest fought the characterization, but the stock plummeted and was eventually delisted from the Toronto Stock Exchange. Kerrisdale shorted Sino-Forest after Muddy Waters released its findings, according to founder Sahm Adrangi.

"We just thought it would be fun," Adrangi said of why he made the video. The 33-year-old said the script was written by a Kerrisdale analyst and was made about a week ago by a New York-based filmmaker for between $10,000 and $15,000.

Kerrisdale, based in Manhattan, manages $300 million. Kerrisdale Partners is up 4.49 percent through August this year, according to performance information obtained by The fund has produced annualized returns of 57.11 percent net of fees since launching in July 2009.

While the video is a joke, the short position to be announced Oct. 6 in New York City is serious. "It's a multibillion company we think is worth zero," Adrangi said.

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