RE:shorts.....I'm sure they did some dd. Most financial instutions do not have time or the very technical skills inhouse to assess all the companies they take a run at. You need some very technical to understand what Recon has been releasing in their dataset.
The model these generalist short funds have is to short any thing that runs too far too fast. Most times they get it right. The one day a small company comes along and will make you pay with a discovery of the ages.
It will be interesting to see how they attack the stock to cover their shorts. I am watching to see how they manage ... if they do.