How You Can Profit From Ubiquiti's War on Wall Street

It's natural for a stock investor (or a CEO) to hate the shorts. A short is somebody who has borrowed shares of your stock from the brokerage and sold them on the promise that he will buy the shares back in the future. The reason this makes the bulls mad is that if enough people are selling your stock, it will send the share price down, down, down.

Here at the Motley Fool, you can short companies in CAPS, the company's crowd-sourced investment ratings service. If you play that game long enough, you might think the acronym stands for Crush All Penny Stocks. Because that's how you win in CAPS. It's not a good idea to short in real life, in my opinion, because your upside is limited and your downside is infinite.

A really nice phenomenon that will make the bulls cheer is the short squeeze. This is when unexpected good news hits the market and many of the shorts are forced to cover their positions, often at a loss. Robert Pera, the founder and CEO of Ubiquiti (NYSE: UI), is a big owner of his own stock. And he loves to surprise the shorts.

Source Fool.com