Short Sellers Strike Fast — Here’s How to Outsmart Them Before They Hit
In today’s volatile market, short seller attacks can strike companies of any size—fast, strategic and with the potential to cause lasting reputational and financial harm. To address this growing threat, CommPRO convened a high-impact panel discussion moderated by Keith Gottfried, CEO of Gottfried Shareholder Advisory LLC. With more than 30 years of experience and recognition as a two-time National Association of Corporate Directors Directorship 100 honoree, Gottfried is a leading expert on shareholder activism preparedness and defense for public companies and boards. He led the conversation with a panel of experts from the legal, financial and communications arenas who have guided companies through some of the highest-stakes contests in recent years.
The Nature of the Threat
“Short sellers aren’t here to collaborate; they profit when your stock drops,” Gottfried said, framing the conversation. These actors often publish damaging reports to create fear and drive share prices down.
Bryan Armstrong, senior managing director at FTI Consulting and head of the firm’s financial communications practice in the Americas, added critical context. With more than 25 years of experience advising boards on investor relations, IPOs and mergers and acquisitions, Armstrong said: “Short sellers have no interest in constructive dialogue. Their goal is to expose perceived weaknesses before they’re priced in. It’s fast, public and rarely personal—until it becomes personal.”
Why Companies Get Targeted
Drawing on her experience leading activist campaigns and raising more than $1 billion in capital, Alyssa Barry, president of Alliance Advisors Investor Relations and a 2024 WXN Canada’s Most Powerful Women honoree, outlined the triggers that draw short seller scrutiny.
“Opaque disclosures, insider selling, high valuations and questionable business models are red flags,” Barry said. “Short sellers go looking for gaps—whether real or perceived.”
Brendan Foo, partner and global head of corporate contests at Forward Global, brought a perspective shaped by advising on more than 75 proxy contests and hostile takeovers.
“Companies with high key-person risk, where everything hinges on one executive, can draw attention—especially if that person is seen as cutting corners or being overly promotional,” he said. Foo, who co-founded Forward Risk and brings global investigative expertise, emphasized how perception plays a powerful role in escalating risk.
Preparation, Not Panic
The panelists agreed: Preparation is everything.
“Companies run tabletop exercises for long activism all the time. But when it comes to short attacks, most are caught flat-footed,” said Gottfried, whose advisory work includes guiding companies through high-profile defense situations.
Barry stressed the need for continuous monitoring and internal readiness.
“You can’t wait until the storm hits. Boards need real-time sentiment tracking and clear internal protocols—especially with retail investors playing a larger role,” she said, referencing her work helping companies manage investor engagement under pressure.
Foo echoed the need for self-assessment.
“Yes, it can feel uncomfortable to investigate your own company when things are going well. But it’s far better than discovering issues through a short seller’s report,” said the former journalist and geopolitical analyst, who now advises both activists and issuers on complex corporate disputes.
How to Respond
Armstrong laid out the response playbook with precision.
“Speed and precision are critical,” he said. “You need to assess the attack, validate or refute the claims, and decide quickly whether a public response is warranted. Every hour of silence cedes ground.”
With experience guiding major SPACs, IPOs and ESG programs, Armstrong underscored that public positioning must be backed by operational truth.
Tone, the panel emphasized, is a make-or-break factor.
“Don’t get emotional, and don’t make it personal,” Foo said. “Short sellers often hope for a knee-jerk, defensive response. Stay focused on the facts.”
Legal action and buybacks, the panel warned, are often counterproductive.
“Buybacks or lawsuits might feel satisfying, but they rarely solve the core issue,” Armstrong said. “You need a strategic, fact-based approach that reassures long-term investors.”
Final Takeaways
Barry advised companies to think like activists themselves.
“Be your own activist,” she said. “Pressure-test your story. Fix issues before someone else shines a spotlight on them.”
Armstrong pointed to the strength of often-overlooked allies.
“Retail shareholders can be a strong source of support if engaged early and often,” he said.
In sum: Short seller attacks are fast, public and potentially damaging—but with preparation, self-awareness and cross-functional strategy, companies can defend their credibility, reinforce their narrative and emerge stronger.
