Shorting Bubbles With Low Moats | Short Selling 101 | Zer0es TV

TL;DR

June Lee from JL Warren Capital discusses her role as an outsourced China analyst, providing extensive research and data to help clients reach conviction in their long or short investment theses.

Transcript

my name is june lee i run a data research company called the jl warren capital our clients call us the china intelligence agent in the sense that we are commonly used as their outsourced the china analyst and our job is to provide value-added research to help them to reach conviction of in their thesis whether it's long or short our edge is we have... Read More

Key Insights

• 👨‍🔬 JL Warren Capital is an outsourced China analyst, providing valuable research and data to clients to support their investment theses.
• ✋ China's retail sector is a focus for the company, and it offers high-frequency data and channel checks to investors.
• ✋ Short selling in China can be attractive due to the high number of IPOs and the potential for challenging business environments.
• 🍰 Shorting outright frauds is more challenging than bubble shorts, as it requires dismantling the entire system supporting the fraud.
• 🧑‍🏭 Examining capital structure, risk factors, and business overview are essential when analyzing IPO perspectives.
• 👨‍💼 Fraudulent management often seeks to grow their businesses rather than remain fraudulent, but the quality of the business model and operator can hinder success.
• 👨‍💼 Capital alone is not a moat, and businesses that achieve scale by burning cash are not sustainable.

Questions & Answers

Q: How does JL Warren Capital provide value-added research to its clients?

JL Warren Capital offers extensive resources in China, covering the retail sector and providing high-frequency data and channel checks. This research helps clients make informed investment decisions and reach conviction in their investment theses.

Q: What makes short selling in China appealing as an investment strategy?

China has a large number of IPOs, which increases the percentage of potential short candidates. Additionally, companies that came to the US for fundraising during the US-China tensions may face challenges, making them attractive short candidates.

Q: How difficult is it to short outright frauds compared to bubble shorts?

Shorting outright frauds is more challenging because it involves battling against investment bankers, auditors, and insiders supporting the fraud. Identifying precise timing for the collapse of a fraudulent business is also difficult, making frauds harder to short.

Q: What factors should investors consider when analyzing IPO perspectives?

Investors should carefully examine the capital structure, understanding the pre-IPO investors and their time horizons. Risk factors and the business overview are also essential to assess potential investment opportunities.

Summary & Key Takeaways

• June Lee runs JL Warren Capital, a data research company that provides value-added research on Chinese businesses for clients, including multinational retailers.

• The company focuses on the retail sector and offers high-frequency data and channel checks to investors.

• Lee's background in banking and buy-side experience led her to launch her own business, which differentiates itself by covering both Chinese businesses and multinational companies operating in China.