OPINION: SEC Hunt Silences Bank Watchdogs

Hedge funds are some of the best investment resources around. Ask any veteran journalist covering stocks, and he or she likely will agree on this point.

The simple reason is that the analysts and portfolio managers working at hedge funds typically command the highest salaries in the investment world. Why? They tend to be the smartest investors around.

They are skeptical of management, realize the conflicts inherent to published sell-side Wall Street research and even go to great lengths to ferret out information that isn't in SEC filings (by hiring private investigators, for example).

The problem is not short-sellers, it's the perception of short-sellers. They are viewed by common folk and unscrupulous public company CEOs as the monsters hiding under the bed. Their fangs are wicked and sharp, and all they care about is profiting off other people's pain, or so the foolish theory goes.

In reality, any reasonable person would agree that short-sellers perform an essential service, since they add to the efficiency of the stock market.

As a journalist, being able to tap into these investors' minds is a luxury that the average retail investor doesn't have. Instead, many retail investors are forced to listen to the endlessly bullish forecasts offered by public company CEOs and the sell-side analysts who brown-nose with them.

The aforementioned source of mine, with whom I have been speaking on a regular basis for the past year and a half, is now much more hesitant to chat because of his boss' orders. Rather than the regular phone calls we used to have, he says he's now more inclined to meet for a beer.