Investors abandon short-selling strategies because the returns are too episodic
Larry Kochard · Larry Kochard – From Endowment Professor to OCIO Chief at Makena Capital (Capital Allocators, EP.250) · May 16, 2022 · at 17:11
Larry Kochard explains why institutional investors struggle with long/short equity allocations and how short alpha behaves over market cycles.
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“Shorting's hard. It's very difficult to do behaviorally. It's very difficult to generate returns consistently. The returns are very episodic, so oftentimes people just give up at the wrong time, but I do think there's an inefficiency that can be exploited on the short side, and having managers that can add value off shorting Over an extended period of time, not every year, there's not going to be consistent value generated year in and year out, I think is very attractive.”
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