In this article we discuss the 5 most successful short sellers of all time. If you want to read our detailed analysis of these short investors, go directly to the 10 Most Successful Short Sellers of All Time.
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5. Steve Eisman
American businessman and investor Steve Eisman ranks 5th on the list of the most successful short sellers of all time. During the collapse of the US housing bubble in 2007 – 2008, Eisman profited by shorting collateralized debt obligations (CDOs). He became renowned for his bet against CDOs at Greenwich, Connecticut-based FrontPoint Partners LLC, a unit of Morgan Stanley. By 2010, Eisman managed over $1 billion for FrontPoint.
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4. John Paulson
John Paulson ranks 4th on the list of the most successful short sellers of all time. Paulson is an American hedge fund manager who became a billionaire through his financial foresight. He leads a New York-based investment management firm founded in 1994, Paulson & Co., and is known to be someone who made an enormous fortune in Wall Street history. In 2007, Paulson earned around $4 billion after shorting the US housing market. He foresaw the subprime mortgage crisis and used credit default swaps to bet against mortgage-backed securities. Three years later, he earned another $4.9 billion by investing in the gold sector.
John Paulson of Paulson & Co
3. Fahmi Quadir
Founder of the New York-based Safkhet Capital, a short only fund, Fahmi Quadir, is renowned for her short sales. One of the most famous bets was placed by Quadir, third on the list of the most successful short sellers of all time, was when she shorted Valeant Pharmaceuticals International, Inc. (NYSE: VRX), whose stock fell dramatically in 2015 from $260 to the low value of $8. After realizing that Valeant Pharmaceuticals International, Inc. (NYSE: VRX) was involved in unethical and potentially fraudulent practices, Quadir executed her short in June 2015, just as the stock was nearing its peak. Her bet paid off as the stock fell from $257 to $28 between July 2015 and March 2016. As the stock lost 90% of its value, it became the most significant profit earner for Krensavage, the firm Quadir was affiliated with at the time, which earned a 14% return in 2016 through this short, which has helped Valeant Pharmaceuticals International, Inc. (NYSE: VRX) short sellers to make $2.8 billion in profit since the stock’s peak in 2015.
2. David Einhorn
Second on the list of the most successful short sellers of all time is David Einhorn, an American investor, and hedge fund manager. Einhorn founded Greenlight Capital, a long-short-value-oriented hedge fund, in 1996. One of his most famous bets is from July 2007, when he shorted the Lehman Brothers Holdings Inc. stock under the belief that they have massive exposures to illiquid real estate investments that were not accounted for properly. His highly publicized statement to short Lehman Brothers Holdings Inc. revealed that they were also using dubious accounting practices in their financial filings. His word ended up being incredibly accurate, as the Lehman Brothers Holdings Inc. stock fell sharply, ending first in a $2.8 billion quarterly loss and eventual bankruptcy in 2008. Einhorn himself has become a highly influential investor, with a net worth of $700 million and a fund with around $5.5 billion worth of assets under management in 2018.
David Einhorn of Greenlight Capital
1. George Soros
Perhaps the most famous and successful of all the short sellers in the world is George Soros, the man responsible for “breaking” the bank of England, earning him the first rank on the list of the most successful short sellers of all time. When Britain upped its interest rates to attract more people to the pound, speculators like Soros began heavily shorting the currency. When the government realized that it was losing billions of pounds because it attempted to buoy its currency to higher levels artificially, it gave in. It withdrew from the Exchange Rate Mechanism (ERM). Due to this, the pound came back more vital than ever, and the British economy was able to strengthen once inflation levels were controlled and high interest rates were reduced. For the role Soros played in enforcing market dynamics, he was able to earn $1 billion on the deal while cementing his reputation as the premier speculator of currency.
George Soros of Soros Fund Management
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