Josh Stern

Acquisition Of CDW Highlights Challenges Of Shorting On Valuation Alone

The concept "Don't short without a catalyst" is repeated so commonly that it is a cliche. But I honestly don't know why someone who was shorting based on valuation would focus on CDWC when there are so many more absurd valuations everywhere one looks. As an example, consider CCI - it is absurdly overvalued (price to sales of 11.5X and losing money), overleveraged, has no economic moat, decling GAAP and operating income, yet it continues to rise like a moonshot. I've got LEAP puts on it but only think of them as portfolio insurance against a market meltdown, not something I actually expect to make money on.