In this Short Selling 101, Chris Drose, founder of Bleeker Street Research, lays out his process and reasoning for focusing on bad actors to find short candidates. When companies go bankrupt and the lies that the promoters have been telling finally start to unravel, it’s amazing how often the same usual suspects are found at the scene. If it wasn’t for regulator negligence this incredible source of alpha probably wouldn’t exist, but for those willing to do the work searching for and following the career progression of these serial offenders, it can provide a continuous stream of targets. Chris argues that for investors with the patience to wait for the right time in the promotional cycle and the ability to stomach the inevitable volatility, outcomes can be predicted with almost 90% certainty as these management teams, auditors, and investors continue following the same old playbook.