If you think a short-selling fund can't make money when stocks go up, you might learn a thing or two from looking at David Rocker's portfolio at New York-based Rocker Partners, a short-biased fund that in September was poised to score big on the long side.
Rocker made a killing on shares of PalmSource when the company's stock shot up almost 80% to roughly $18 in a single day of trading on the September 12 news that Japanese tech company Access would be paying $324 million for the beleaguered PDA-software maker. And Rocker, whose fund holds a 9.7% stake in PalmSource, suddenly found that his 1.6 million shares popped in value from $12.3 million to $28.8 million.
How could a short-biased fund make so much money on a long position, you ask? Easy. Short sellers like Rocker will scour for weak companies, often building long positions...