RE: Oct 15 Short Position - WINLOL!
https://www.globeandmail.com/servlet/ArticleNews/TPStory/LAC/20031021/RDYNA21//?query=short+sell
Dynamic has Power to short sell
By SHOWWEI CHU
UPDATED AT 12:24 PM EDT Tuesday, Oct. 21
Dynamic Mutual Funds Ltd. says it has received permission from the Ontario securities regulator to allow portfolio managers to selectively short sell stocks in its Power family of funds, a strategy primarily used by hedge funds.
"It allows us as portfolio managers to have additional tools to reduce the volatility of our overall portfolios and hopefully to profit from companies that we find whose stocks should be going down," said Dynamic vice-president Noah Blackstein.
To minimize risk, the short position of each Dynamic Power fund "will be kept under 10 per cent of the net assets of the fund, and there will be stringent rules pertaining to concentration, cash-cover and stop-loss," said a company release. The funds have more than $1.5-billion in assets under management and will be in a position to short sell by February, 2004, the release said.
Peter Loach, managing director of mutual funds research at BMO Nesbitt Burns Inc., said Dynamic has been trying to get approval from regulators since it got approval from investors in June, 2002. "It's a good thing," he said, because it gives managers another choice other than underweighting or avoiding a bearish stock.
Dan Hallett, president of Dan Hallett & Associates Inc. in Windsor, Ont., said there are risks with short selling. "In a short sell, you're essentially borrowing shares that you don't already own and you're selling them today hoping to buy them back later at a lower price and then 'repay' that loan after the price has gone down," he said. "The risk is that the price keeps going up."