What to do when your shares are heavily shorted

Shorting is an investment activity that’s usually the domain of professionals and the bane of retail shareholders.

Fund managers who short a stock will make money if the price goes down. It’s hardly an endorsement for the company.

So what happens if you read that a share that you own has been shorted?

Forager Funds chief investment officer Steve Johnson recently addressed this dilemma in a company video. 

Here’s the good news

For any share that you purchase or hold, you need to research both the pros and cons of the company behind it.

This means a report from a short investor is a non-emotive way to educate oneself about the risks, according to Johnson.

“We always want to know what the bear case is on a stock if we’ve…