Hallowed Hedge

Goldman Sachs is regarded by many as a potentially effective source of ideas. We count Abby Jo Cohen among our favorites.

Goldman is out with their 40 most undervalued stocks going into 2013. You can check out the dashboard here along with the Business Insider review of the 40 favorites here:

GOLDMAN: These Are The 40 Most Undervalued Stocks In The Market

As displayed on the dashboard, we’ve invested $25,000 into each of the (40) for a total of $1,000,000.

Where’d we get the $1,000,000? Since we’re not in the practice of minting our own $1,000,000,000,000 coins around here, let alone $1,000,000 — we created our own $1,000,000 by finding a willing hypothetical broker who would let us “short” 25 stocks ($40,000 each) to generate the necessary funds.

The dashboard for these (25) despised stocks is available here

Where’d we come up with this list? Business Insider compiled a list of the 25 stocks with the highest short interest as a percentage of float. In short, these are a group of stocks with the most institutional (rhino) smart money betting AGAINST them.

See: The 25 Stocks That Everyone Is Shorting Like Crazy

In a perfect world, our shorted stock reserves will go down in value (it’s what we owe and ultimately must repay) while the (40) loved stocks will advance. But we’d settle for the value of the Goldman faves outpacing the Most-Hated for the purposes of this hedging demonstration.

We’ll check back in a few months to see if the hedge is en fuego.

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