Confessions of a Short Seller

Kass, 58, is founder and president of Seabreeze Partners Management in Palm Beach, Fla., a hedge-fund firm overseeing about $200 million in short positions. A veteran investor with a research background, he headed institutional equities at First Albany and later, JW Charles/CSG, in the early to mid-1990s.

--------

Doug runs a short only fund, Seabreeze Partners. He discusses a few key datapoints from the interview:

• As of April 30, flagship Seabreeze Partners Short fund was up 16.5% (vs 5.6% loss for the SPX)

• Since inception (January 2005) the fund is up 40.7%, versus a 15% gain for the S&P

• The amount of trading dollars that are in dedicated short pools are tiny: About $5.4 billion (Knowledge@Wharton). That's one-seventh the size of Fidelity's Magellan Fund.

• The $5.4B dedicated short hedge funds are a sliver of the nearly $2 trillion of hedge-fund assets.

• Over the past two decades, 58% of the issues on the New York Stock Exchange have advanced, while 42% have declined -- every year.