ACICFinished
- Final return
- −30.8%
- vs similar-stock shorts
- −18.6 pp
Dates & source
- Fired
- Nov 15, 2023
- Exit date
- Feb 13, 2024
Sell short after a first control weakness
Sell short Sell When a Company First Reports a Control Weakness · 10-K text change
Selling short: it profits when the stock falls — shares are borrowed to sell and bought back later. It needs a brokerage account approved for short selling (a margin account), and you can lose more than the money you put in.
This sells the stock short, aiming to profit if it falls. Every yearly and quarterly report has a section where management says whether its financial controls work. When that section admits a material weakness (a serious hole in how the numbers are checked) for the first time, this sells the stock short for three months. Studies find these admissions are followed by weaker returns, and the first one matters most.
Newest idea 1,067 days ago
Updated Oct 16
On this page
How the test works
The planned holding period in these tests is 3 months (90 days), from opening to closing an idea.
Sell short when it fires
Sell borrowed shares at the next trading day’s close after the record posts.
Hold 3 months
The same hold for every idea, with no target. One exception: in these tests a short is bought back early if the price doubles — a −100% result.
Close it 3 months later
Buy the shares back 3 months after the sale, on the next available trading close.
Every number on this page uses this sell rule — the other sell rules we tested are under “The full test results and the math” below.
How it did in past tests
Research only — not yet confirmed by new trades
Publication check: Research only
Not passed yet — 6 of 16 checks:
- Some trades have no price we could check, often at companies that later stopped trading. The range shown counts only the priced ones; counting the rest at a poor result pulls its low end below zero.
- After trading costs, the range for its average still dips below zero.
- Its edge leans on one year: without its best year it doesn't hold up.
- It needs at least 20 finished trades on 10 separate days after the rule was frozen.
- Some of those new trades are still open; each has to finish its full hold.
- Those new trades then have to beat similar stocks after costs, by more than luck across every rule we tried.
Passed — the other 10: Current calculation · Public disclosure dates · Complete finished trades · Every trade compared · Enough separate trading days · Survives without the best three stocks · Survives higher costs · Rule frozen before the test · Rules tried alongside it counted · First new signals set aside.
Tested exit: 3-month hold. Historical results alone do not approve a rule for publication. New event tests include an estimated 0.20 percentage point round-trip trading cost, with a 0.50-point stress check.
New trades so far: 0 finished, across — separate days after the rule was frozen.
2 signals set aside across 2 disclosure days; 1 still need complete results. 1 fell outside the rule's own price floors and count as resolved. Missing results stay in the count.
Left: did worse · right: did better. Zero matches the comparison. pp = percentage points; the scale adjusts to include the result.
In past tests, selling each stock short made
−2.7%
on average over 3 months · 613 tries
Selling similar stocks short instead returned
−3.4%
the short position did 0.7 percentage points better
Made money in
267 of 613
tries (44%)
613 tries finished the 3-month test · 0 still open · 2,982 signals ever
Past results don't predict future ones.
Similar stocks means the index fund for each idea's sector — or the S&P 500 when we can't place its sector. (The S&P 500 for 18 of 613 tries here.)
| How it did against similar stocks | 0.7 percentage points better than selling similar stocks short — over 3 months |
|---|---|
| Paid for borrowing the shares? | Yes, about 0.7 percentage points off the average. Every figure above already takes it out. It is our estimate, from how easy each stock was to borrow. Without the fee: 1.4 percentage points better than selling similar stocks short. |
| Range for the average (95%) | −1.0 pp to +2.5 pp vs selling similar stocks short — the range the average probably falls in, not a best-to-worst case |
| Tested on enough tries? | 613 tries on 331 separate days ✓ enough |
| Works in different markets? | More than all of the edge came from a single year (129%) — the rest took some back ⚠ one year did most of it |
| Spread across many stocks? | 41% from a single stock ⚠ leans on one stock |
| Still works without its biggest winner? | +1.0 pp vs selling similar stocks short without GRPN ✓ holds up |
The 5 newest of 613 finished ideas: 2 of 5 beat selling similar stocks short — one block each, newest first
- ACIC · Nov 15, 2023 · Return −30.8% · −18.6 pp vs similar-stock shorts
- ADTN · Nov 10, 2023 · Return −19.3% · −4.8 pp vs similar-stock shorts
- ASTH · Nov 10, 2023 · Return −23.0% · −8.3 pp vs similar-stock shorts
- GNW · Nov 10, 2023 · Return −11.1% · +4.4 pp vs similar-stock shorts
- TBRG · Nov 10, 2023 · Return +3.1% · +16.7 pp vs similar-stock shorts
did betterdid worseno comparison
ACIC · Nov 15, 2023 · Return −30.8% · −18.6 pp vs similar-stock shorts
Inspect all 5 displayed outcomes
pp = percentage points above or below the comparable short-position return.
- ACIC · Nov 15, 2023 · Return −30.8% · −18.6 pp vs similar-stock shorts
- ADTN · Nov 10, 2023 · Return −19.3% · −4.8 pp vs similar-stock shorts
- ASTH · Nov 10, 2023 · Return −23.0% · −8.3 pp vs similar-stock shorts
- GNW · Nov 10, 2023 · Return −11.1% · +4.4 pp vs similar-stock shorts
- TBRG · Nov 10, 2023 · Return +3.1% · +16.7 pp vs similar-stock shorts
Ideas for the week of Oct 12
This week's list isn't set yet — it's set on the first fresh data of the week of Oct 19.
This rule published no ideas for the week of Oct 12.
Every idea
Results under the 3-month hold · 0 still open · 613 finished · each idea's buy-back day is 3 months after it fired · an open idea shows its result so far · a short position’s result is what selling the stock short made.
ADTNFinished
- Final return
- −19.3%
- vs similar-stock shorts
- −4.8 pp
Dates & source
- Fired
- Nov 10, 2023
- Exit date
- Feb 8, 2024
ASTHFinished
- Final return
- −23.0%
- vs similar-stock shorts
- −8.3 pp
Dates & source
- Fired
- Nov 10, 2023
- Exit date
- Feb 8, 2024
GNWFinished
- Final return
- −11.1%
- vs similar-stock shorts
- +4.4 pp
Dates & source
- Fired
- Nov 10, 2023
- Exit date
- Feb 8, 2024
TBRGFinished
- Final return
- +3.1%
- vs similar-stock shorts
- +16.7 pp
Dates & source
- Fired
- Nov 10, 2023
- Exit date
- Feb 8, 2024
| Stock | Fired | Status | Buy-back day | Result | vs similar-stock shorts (pp) |
|---|---|---|---|---|---|
| ACIC | Nov 15, 2023 | Finished | Feb 13, 2024 | −30.8% | −18.6 pp |
| ADTN | Nov 10, 2023 | Finished | Feb 8, 2024 | −19.3% | −4.8 pp |
| ASTH | Nov 10, 2023 | Finished | Feb 8, 2024 | −23.0% | −8.3 pp |
| GNW | Nov 10, 2023 | Finished | Feb 8, 2024 | −11.1% | +4.4 pp |
| TBRG | Nov 10, 2023 | Finished | Feb 8, 2024 | +3.1% | +16.7 pp |
pp = percentage points: the short-position return minus the comparable short-position return. A dash means the comparison is unavailable.
Showing 5 of 613 ideas
608 more ideas, each with its result
Members see every idea this rule fired, open and finished, under any of the sell rules we tested — and can download them.
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The full test results and the math
pp means percentage points: the difference between two returns. Actual returns are shown in %.
Average result (3 months)
−2.7%
range for the average (95%): −5.1% to −0.4%
Edge over selling similar stocks short
+0.7 pp
range for the average (95%): −1.0 pp to +2.5 pp
Held a year instead (selling short): −11.2% on average (613 tries).
Steadiness (Sharpe ratio) −0.25 — choppy: how even the results were from one try to the next.
Every buy-back rule we tested
Every sell rule we tested, side by side, comes with membership.
Risk and style checks
- After style factors (market, size, value, momentum…) the edge is +0.5 pp instead of +0.7 pp — the edge holds up after them. Tilts: Market −1.16 · Profitability +0.50 · Size −0.38 · R² 0.27.
- The stocks it picked trade a median $12.1M a day; 0% of its ideas were in thin stocks (under $2M a day).
- At one percent of that volume a trade is about $121K.
- The edge by market fear on the day it fired (the VIX): calm +1.3 pp (34 tries) · normal +2.9 pp (216 tries) · stressed −3.6 pp (34 tries).