With the markets in turmoil, there may be no better time to launch a dedicated short fund. At least that’s the view of Lakshmi Ganapathi and Robert MacArthur, the husband-and-wife team who run Unicus Research, an independent research firm that offers short-selling ideas.
“In response to persistent demand from institutional investors and family offices worldwide, Unicus Research has laid the groundwork for the launch of a dedicated short-only hedge fund,” Ganapathi told Institutional Investor. Unicus has clients in Australia, Europe and the U.S. that have been “pushing” her team at Unicus to start a hedge fund, saying “short selling requires a lot of babysitting” that they don’t want to do on their own.
Ganapathi said Minerva Short Only Investment Management will launch in the next few months.
The track record of 59 stock research recommendations Unicus has made since 2020 that she shared with II shows that all but six have been profitable.
The two principals of the new fund, Ganapathi and MacArthur, between them have four decades of dedicated short-selling experience. They are close to prominent investor and short seller Steve Eisman, known for his role shorting mortgage-backed securities as a portfolio manager at Front Point Partners in the leadup to 2008 in Michael Lewis’s “The Big Short.” MacArthur got to know Eisman when both were shorting for-profit education companies following the financial crisis.
Ganapathi called Eisman a “mentor” and said “I’ve been learning a lot from him.” She said she has known him since 2015.
Short selling is not for the faint-hearted. But “even though it can deliver substantial returns, the approach carries inherent risks that we believe investors deserve to understand clearly,” Ganapathi said.
The duo has developed “a set of critical guiding principles—our ‘golden rules’—that help us navigate the blind spots and land mines,” according to Ganapathi.
For example, “We don't short biotech or biopharma because we don't know who's bribing whom,” she said. “And we don't do private credit shorting because as much as it's tempting to jump on the bandwagon, you never know what goes on behind the scenes that we are not privy to.”
Ganapathi also has a Substack newsletter, The Unicus Investor, where she has written extensively about private credit. She does not offer short selling research on Substack because the research is sold exclusively to institutional investors.
The Unicus team also doesn’t short “cults,” she said.
Nor will the short-only fund engage in activist short selling, according to Ganapathi. “You say these things are wrong, and you make money off it,” she said. “The stock goes down and you cover. How is that positive? It's market manipulation and it just doesn't sit well with me.”
Ganapathi, the founder and CEO of Unicus Research, previously worked at Alternative Research Service, a Connecticut-registered investment adviser offering short selling ideas and was founded by MacArthur, who is now Unicus’ senior advisor and short selling strategist. He began his career in 1994 at an institutional broker-dealer, where he deployed a wide variety of short-selling strategies.
MacArthur founded the Alternative Research Service in 2005, which he closed in 2018. Throughout his career investigating and exposing fraudulent companies, MacArthur authored Online Education Fraud: The Diary of a Short Seller, a published account detailing his role in uncovering a major for-profit education fraud.
