Hedge Fund Strategies- Dedicated Short Selling

CFA Level III Alternative Investments
#1

In the curriculum, they say that dedicated short selling uses low leverage because there is natural volatility with it, but I am a bit confused about this

Because I thought that short selling on its own means that you borrow to sell the stock and repurchase it. So why are we saying that dedicated short selling is not using leverage or that the usage is low?

#2

I think the emphasis here should be no additional leverage is required because a dedicated short strategy is already highly levered. You borrow the shares which make the strategy inherently levered.

1 Like
#3

you are right.

That’s what I also thought, but I wasn’t sure

Thank you a lot