“The Assassin” of Wall Street

Editor’s Note: We’re coming up quickly on Jeff’s Deep Access AI launch…

Tomorrow night at 8 p.m. ET, Jeff’s revealing all the details of his new research advisory – Deep Access.

That includes details on the oncoming volatility he believes is coming, and especially for some popular artificial intelligence stocks… and a demonstration of the strategy we’ll use to profit from this volatility.

If you haven’t already gotten your name on the list, just go here to automatically sign up to join us tomorrow night, November 20, at 8 p.m. ET.

Then read on for a little bit of insight into this new service…

She was only two years into her career as a Wall Street analyst, but Fahmi Quadir knew that she was onto something.

Quadir was still in her 20s and working for Krensavage, a small hedge fund, which allowed her to contribute far more than had she been previously working in the lower ranks of a massive investment bank.

In 2015, through her fastidious research, Quadir gained conviction in one stock in particular, Valeant Pharmaceuticals. But here’s the thing…

Quadir didn’t believe the stock was going higher. She believed it would crash.

Cutthroat & Contrarian

Valeant was a different kind of pharmaceutical company.

Its strategy was to acquire drugs already approved by the Food and Drug Administration (FDA) and increase the prices of those drugs. It wasn’t investing in drug research and development the way that most pharmaceutical companies do, and it was ruthless in its mission.

And most of Wall Street loved it, as we can see in the chart below. Valeant ran up from $10 a share in 2009 to $260 a share by late summer of 2015, a more than 2,000% gain.

Not surprisingly, as politicians caught on to Valeant’s strategy, there was a lot of opposition to what Valeant was doing.

Raising prices on existing drugs by many multiples has long been frowned upon, as it negatively impacts patients.   Insurance companies often don’t cover the entire increase in prices which results in many patients no longer being able to afford their medicines.

But beyond the ethical implications, Quadir didn’t like what she saw in Valeant’s books. She believed that Valeant was engaged in fraudulent accounting practices. She also believed that the stock was grossly overvalued and that its corporate strategy was deeply flawed.

It appeared that Valeant was overpaying for drug assets. This meant that the only way it could keep its house of cards in place was through egregious price hikes on the drugs.

Quadir was so convinced that Valeant was in big trouble that she established a large short position in June 2015 very close to Valeant’s peak.

Krensavage borrowed massive amounts of Valeant stock to execute her trade and sold them into the market, hoping to buy those shares back at much lower prices in the future.  A classic short sell.

It was a bold trade that would make the young analyst infamous – something that is highly unusual for someone so early in their career.

As we can see above, Quadir would have been hard-pressed to have timed the short trade any better. Between July 2015 and March 2016, Valeant collapsed from $257 to just $28. It quickly became the most profitable trade at Krensavage…

… and it earned Quadir a nickname on Wall Street – “The Assassin.”

Quadir in 2019 | Source:  Institutional Investor

Ruthless, and a badge of honor for the analyst. And doing so before turning 30 made it that much more impressive.

Most have never heard of her before, but her name received some notoriety when her story was featured in the third episode of the Netflix documentary Dirty Money.

Quadir is now on her own, running her own short hedge fund and scouring the market for similar opportunities.

Shedding Light on the Depths

The short-selling market is a dark, obscure market.  It’s something that speaks to the inner workings of the public markets, is beneficial for price discovery, and something that has fascinated me for the last three decades.

I learned the hard way in my 20s how to profit from being bearish on stocks and profiting from when I believed assets would decline in price. Short selling, or shorting, is a powerful tool for trading and investing – and due to the risks involved, it is reserved for institutional capital.

It may come as a surprise to many, but short-selling hedge funds outperform “normal” hedge funds by an average annual abnormal return of 4.9%.

It’s actually one of the best-kept secrets on Wall Street – but it requires deep access to information that most self-directed investors simply don’t have, as well as trading techniques that are a bit different from just buying stocks.

Short-selling hedge funds not only sell short stocks but also buy puts in large volumes on the expectation that share prices will fall. These funds tend to be contrarian in nature, trading in opposition to retail trading.

One way to think about it is that most of the time, these funds simply believe that a stock is way overvalued and is destined to fall.

Other times, these funds know something about a company that most investors simply don’t understand yet.

And occasionally, an analyst will uncover some fraudulent business practices… or some kind of problem with a new product rollout that will almost certainly cause a stock to crash.

They might have access to some kind of industry-specific inside information…

The point is that collectively, it’s this knowledge of future outcomes that drives the outperformance in this kind of strategy.

That’s the part that’s always fascinated me…

At any given point in time, somewhere out there is a deep, hidden “pool” of this collective information…

Finding – and accessing – it is hard work… and takes diligence and expertise. But when found, it is worth its weight in gold.

Well, I’ve spent the last decade exploring and nearly three years building…

And after all this time, I’m happy to share that I’ve struck gold.

Join Me Tomorrow

For years I’ve been developing a system to help self-directed investors benefit from these same “privileged” techniques and trading strategies… without spending millions in research and development and tens of thousands of dollars a year on deep access to proprietary data sets.

I’ll have much more to say about it in the coming days. But for now, I’m excited to say that I’ll be launching my first new investment research product in more than three years tomorrow night. And I have my first three trade recommendations locked in and ready to go.

Using artificial intelligence, I’m able to sift through millions of transactions a day on more than 3,000 companies. I can “see” everything that hedge funds and investment banks are doing… as they establish their short positions – based on privileged information that they’ve painstakingly developed.

My neural network can identify the trading patterns that consistently predict a large fall in a stock, allowing me to build simple trade recommendations to profit from those future moves.

For anyone interested in learning more, I’ll be sharing the details tomorrow night in a special presentation. I would invite you to join me. You can do so with one click here…

Jeff