MOST READ: 3 Stocks That Are Going to Zero

Updated from July 22, 11:31 a.m. EDT

Regardless of market direction, regardless of the economy, there are a few companies out there that are already the walking dead. They can't compete, or they've suffered from years of poor management, or their expenses have spiraled out of control due to rising cost of inputs, or they are just in the wrong business at the wrong time.

Even Buffett has said that the best management team in the world can't save a business in a poor industry. He found this out all too well when he bought a struggling textile mill and failed to turn it around: Berkshire Hathaway. Ultimately, he gave up on the mill and stuck to insurance.

Hedge funds know all too well which stocks are going down the drain. When a stock is heavily shorted, there is only one reason: Hedge funds are gunning for it. They've done the research, they've spied on the CEOs and CFOs. They've rifled through the garbage cans in the company parking lot. They've pretended to b janitors while poking through the papers scattered on the COO's desk.

So here are the things we found in the three stocks below that are going to zero:

• Heavy short interest

• Declining revenues and margins

• A competitor that has become the industry leader by a wide margin

• Factors distracting management

• Heavy debt load so the company will not be able to tread water without restructuring itself and crushing shareholders

• Consistently missed analyst estimates

• Very few quality hedge funds as shareholders

To read the rest of the story and find out which three companies are going to zero, please click here.

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A note from James Altucher:

Every weekend I send an email to Jim Cramer and several hedge fund managers about the most interesting portfolios posted on Stockpickr that week. Usually those portfolios not only list stocks according to a theme but also offer significant analysis as to why the stocks are cheap.

Here are some examples:

• Stocks related to drilling the Marcellus Shale

• MLPS with yields above 7%

• Microcaps trading for less than tangible book

• Stocks that do well after Hurricanes

Here's the challenge: Build a portfolio at Stockpickr.com with great analysis, and send me the link. Each great portfolio (with analysis) will get posted on TheStreet.com with your byline (as a "Stockpickr Guest Columnist") and will be included in my email I send to Jim and the other hedge fund managers on my list.