“In today’s market environment, you need to hedge with the appropriate portfolio strategy, and you can make money on the downside. My only regret is that I did not have the opportunity of reading Nitin’s book prior to 1987, 1998 and in 2008.

Today, due to increased volatility, boom and bust bubbles, overpriced story stocks and financial crisis driven by over-leverage, one can make a prudent case that you can protect your portfolio and even seek a profit by engaging in short-selling. Downside Protection, which provides us with process and tenets for short-selling in all market environments is a must read for all asset managers, traders, and investors.”

Joseph J. Grano Jr.
Former Chairman & CEO of UBS Financial Services


Short-selling is not easy, especially over the past 8-10 years. Since 2009, excessive liquidity has lifted the equity markets due to an increased supply of money from quantitative easing and a great rotation from bonds to equities as interest rates have declined, favoring passive instead of active investment management. This changing market dynamic (discussed in more detail in the book) has increased investor appetite for growth stocks, regardless of bottom-line earnings growth, rendering typical short-selling techniques of shorting high multiple stocks inadequate today.

Nitin Sacheti, Founder and Portfolio Manager of Papyrus Capital has had success short-selling in the current market environment. In this book, Sacheti initially walks through his overarching tenets to source and diligence great short opportunities. He further spells out his process through seven case study chapters. Sacheti shares his steps in a stream of consciousness from sourcing the short to a conclusion. Rather than reporting historical facts in hindsight, which rarely uncovers the steps to identify a great short, Sacheti illustrates the situation as it plays out, so that the reader can follow each step and replicate Sacheti’s success. At the end of the book, Sacheti provides counterexamples that passed the initial diligence phase but which he refrained from shorting because they contradicted certain tenets, offering the reader further process insight.

While most short-selling books discuss salacious tales of frauds like WorldCom or Enron, Sacheti believes such shorts are few in number and hard to identify, a-priori. Instead, his tenets isolate a different type of short: the singles, doubles and triples that occur more regularly and create a high batting average for an entire portfolio rather than a single home-run. This approach offers the reader significant downside protection against a long portfolio. 

Foreword by Joseph J. Grano JR, Former Chairman & CEO, UBS Financial Services