Short-Selling Risk

Posted: 20 Aug 2013 | Last revised: 10 Nov 2017

Joseph Engelberg
University of California, San Diego (UCSD) – Rady School of Management

Adam V. Reed
University of North Carolina Kenan-Flagler Business School

Matthew C. Ringgenberg
University of Utah – Department of Finance

Abstract

Short sellers face unique risks, such as the risk that stock loans become expensive and the risk that stock loans are recalled. We show that short-selling risk affects prices among the cross-section of stocks. Stocks with more short-selling risk have lower returns, less price efficiency, and less short selling.

 

Mutual Funds involve risk including the possible loss of principal. Investors should carefully consider the investment objectives, risks, charges and expenses of the funds managed by Counterpoint Mutual Funds. This and other important information about the funds is available in their prospectuses, which can be obtained at counterpointfunds.com or by calling 844-273-8637. The prospectuses should be read carefully before investing. The Counterpoint Mutual Funds fund family is distributed by Northern Lights Distributors, LLC member FINRA/SIPC. To reach the Counterpoint sales team, please refer to our contact page. 

 

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