A SVB short seller explains red flags he saw months ago

You didn't tho. Investing in gold should be a long-term investment, and in a long term price of gold trend is still rising. It was constantly rising till 2012, then fall a little bit in 2012-2016, and is rising again.

Shorts perform significantly more analysis than longs, as they have to have great timing in addition to being directionally correct.

In the article, Bleecker are not making any specific predictions, just explaining their reasoning for shorting this stock.

Their one prediction is "This is not a contained event…. I don’t know what happens."

Yellen has said she is monitoring a small number of unprofitable banks carefully.

From a market perspective, short interest in the regional bank ETF KRE has been rising steadily for a while now.

Looking at unprofitable banks with high implied volatility, the market seems to think First Republic Bank FRC is under some duress.

It is exceptionally costly to short FRC right now, but I imagine anyone with more than $250k in a single account is moving money out right now. Which is the definition of a bank run.

I disagree. Their model is similar to VCs in a way. Hedge funds don't care about the number of times they were correct vs. wrong, they care about the wins from the correct bets being more than losses from the bets that went wrong. It goes even further, if you think about what the point of hedging positions really is (which is essentially making a bet on something you actually believe the opposite of, as an insurance policy in case your main hypothesis goes wrong).

Just like with VCs, they don't expect most of their bets to work out. They just expect those bets that work out to bring in so much money, that the losses from the rest of the bets won't matter.

So yes, a hedge fund can be extremely successful and profitable, even if only 10% of their bet predictions end up being correct. It is all about what those bets are and how they are structured.

With that in mind, I am definitely still of the same take as the grandparent comment.

> Less than an hour before the California financial regulator closed Silicon Valley Bank’s doors on Friday, short seller Dale Wettlaufer is walking me through their financials, and laying out some metrics he’s been closely eyeballing for months.

This establishes who the short seller is, when the interview is taking place, and makes clear that short seller has come to his position after heavy review of SVB's finances over the course of months. It also makes clear for anyone who's come upon the article without context that SVB was shutdown by regulators and that it their decline was newsworthy before that happened.

> The journalist could have spent a few sentences explaining why and how this short seller is giving an interview, why this bank matters, etc

Do you really think the specifics of how the short seller is giving the interview is more important than establishing why they took a short position? The logistics of an interview seem like the least important aspect of it, but if you disagree I'd love to hear why. That said, the article makes very clear why the bank is important in it's fourth praragraph:

> The bank had long sat at the very heart of the private markets as a lender and banker to some half of the industry’s startup companies—not to mention as a prominent lender to venture funds, private equity funds, and a wealth manager to rich entrepreneurs. The bank has a fund of funds, investing in the likes of Accel or Sequoia Capital, and it invests directly in startups itself. The bank effectively touches every part of the private markets.

Also, why the short seller is giving they interview is pretty obvious if you're able to understand subtext. According to the article Dan Wettlaufer works for Bleecker Street Research which is an investment firm focused on short selling. They just made a huge return on a short play that most people never saw coming. When your organization has an outstanding moment, you publicize it.