Contest: Your Best Short Idea For 2016

by: SA Editor Daniel Shvartsman

Summary

We begin 2016 with another straightforward contest - your best short idea for the next 12 months.

With markets starting off the year with a rough patch, this may be an opportune time to find a hedge or a catalyst-driven short.

We're looking for strong catalysts, a clear and compelling case for what the street is missing, and an actionable opportunity with a favorable risk-reward.

The top four entries will win prizes totaling $10K, with finalists earning $150 each and all entrants earning a month of SA PRO access.

Follow the list of entries and read about past and future contests at the SA Contests Hub.

Dear readers and contributors,

Given last week's market turmoil, it's possible this contest theme comes a week late. Or maybe it comes right on time. In any case, we're sticking with another simple theme to kick off 2016: We're looking for your Top short idea of 2016 this time around.

We're looking for your most compelling short idea for the next 12 months: actionable ideas that have catalysts and which are, by definition, contrarian to the current market view on a stock. We've found that short ideas tend to be tougher to write and find, but that the rewards for investors can be powerful. As investors look to hedge for an uncertain market in 2016 (and when is the market ever certain?), hopefully contributors will have a few ideas to share.

For this contest, we are going to name editorial winners; in other words, no performance prizes. We will select 4 winners as well as 8-12 finalists. Prizes will be:

  • 1st place: $5,000 and one month's access to SA PRO
  • 2nd place: $2,500 and one month's access to SA PRO
  • 3rd place: $1,500 and one month's access to SA PRO
  • 4th place: $1000 and one month's access to SA PRO
  • Finalists: $150 (for PRO selection)
  • All entrants: One month's access to SA PRO

I've listed the usual entry details below, but two additional criteria I want to highlight specific to this contest are:

1. The stock must trade at a $250M or greater market cap at some point in January 2016.

2. The idea needs to be actionable. We ask you to highlight how investors can invest in the idea - what is the borrow rate/availability, what options are you looking into, etc. A short idea on a stock like Cynk (OTC:CYNK) in June/July 2014, while in theory compelling, is not a great fit.

Beyond that, we're looking for fully developed, compelling, and supported theses as usual. We hope to see a fundamentals-oriented, company-specific thesis that covers valuation, risk/reward, and market perception. Saying 'oil company x is going broke unless oil clears $75' is not going to be as strong as 'oil company y is a good short because it's about to trip debt covenants, and its wells are not producing well, etc.', since the latter is more specific to the company.

If you'd like to enter a stock you've covered before, you don't need to rehash everything you wrote previously, but the entry should work as a stand-alone investment case and not rely on previous articles; we will be evaluating only the contest entry. Covering a unique angle or stock always helps your article to stand out as well for both publication and contest purposes - Apple is eligible, but it's difficult to come up with a fresh and compelling thesis on the stock, for example (we'd encourage you to avoid Apple and similar stocks).

Please make sure to read all of our criteria and entry details before entering.

Other entry details:

  • All entries must be exclusive to Seeking Alpha, submitted via our normal article submissions process.
  • To enter, you must check the 'Enter PRO Stock Pitch Contest' box in the submissions process (see below). We will not be able to add entries to the contest after publication.
  • The article must be a short idea. We will not accept sell ("don't short it but sell it if you own it") or hold ideas, nor long ideas. The case needs to be made for going short the stock, and not just avoiding it.
  • The idea has to be one you have not entered in the retail stock pitch contest or the mid-cap stock pitch contest.
  • As stated above, the idea must be actionable for investors.
  • As stated above, the focus stock's market cap must be $250M or more, as based on a closing price any time in January 2016.
  • The article must qualify for publication to be entered in the contest. It must additionally focus on the stock specifically and present a complete investment case.
  • We are not accepting ideas focused on ETFs, bonds, or other types of investments. The article must be about a stock, and the stock must have a U.S. listing (whether main board, OTC, or ADR). It can be a preferred stock, but the play needs to be actionable. If it's a foreign-listed stock with an OTC, it can be actionable through the foreign ticker, but you should point out that actionability.
  • We're not looking for pair trades, though if there is a company you think fits as a hedge to your short (or for which your short is a hedge), you're welcome to mention it. The focus should be on the short idea in any case.

Each participant is allowed only one entry.

Winners will be selected by our SA PRO editorial team based on the following criteria:

  • Do you make a clear case for why the market has this stock wrong?
  • Do you present an original thesis on the stock? Netflix short may struggle on this criteria, for example.
  • Are there clear catalysts to drive upside/downside? This is especially important in this competition; pure valuation shorts are less likely to stand out.
  • How is the risk/reward here skewed in investors' favor?
  • How material is your thesis to the stock's price?
  • As a tiebreaker, how did readers and PRO subscribers react?

We encourage you to review past contest winners to get an idea of what we target.

We're also giving one month's PRO access to all entrants.

We are not considering articles for PRO payments (PRO or Top idea). All articles will still receive standard exclusive article payments ($35 + $.01/PV), and as stated above, 8-12 finalists named will receive PRO status and payment ($150/article), in addition to the 4 top entries winning their prizes.

All articles will be exclusive to PRO subscribers (including contest entrants) for 30 days after publication. They will then be made available to all readers as per standard publication.

Check the SA Contests Hub to see all entries to date, as well as planned themes for future contests and results from previous contests.

The contest is open to all investors. If you're already a Seeking Alpha contributor, you know how to submit an article. If this is your first article submission, please click here to register as a contributor and submit an article.

We are accepting entries from today, January 11, through to 11:59 pm ET Sunday, January 31. To enter, you must check the box to enter the PRO stock pitch contest when submitting the article (on the last page of our submissions process). You can also put a note to the editors stating, "Please consider this article for the 2016 Top short idea Stock Pitch Contest." January 31 is the submissions deadline; the article may be published after the deadline as long as it was originally received on time.

The four winners and the finalists will be announced the week of February 8th.

(As a note for those waiting - we plan to announce Top long idea for 2016 winners this week).

Please let us know if you have any questions in the comment stream below, or feel free to contact me directly via direct message. I'm looking forward to seeing your entries and seeing how the picks perform over the next year.

Good luck!