Recognizing that "street" research was one-sided and incomplete, OWS's founder, Mark Roberts, hung out a shingle in Harvard Square, Cambridge, and started publishing deep fundamental research for professional investors. His first clients were a new group of investment managers called "hedge funds." OWS's first report, which focused on fundamental problems for a growing franchisor, was entitled "TCBY is in Deep Yogurt." And indeed they were -- the stock declined -90%. We continued to draw lessons from TCBY more than 25 years later, when we recommended Planet Fitness (PLNT) as a short to our clients, based on a similar OWS framework of identifying conflict between franchisor and franchisees. Markets and companies may change over decades -- but human behavior remains the same.

OWS clients made hay during the Dot Com bubble. One notable OWS report focused on Sabratek, a MedTech company with a bombastic growth story (and aggressive accounting to match). As OWS's skeptical research was picked up by financial media, public scrutiny of Sabratek increased. The company failed to file its 2Q99 results with the SEC, Sabratek's CEO resigned and the stock price declined more than -90%. OWS was hitting its stride.

OWS's report on Enron -- and its questionable accounting practices -- opened the door to a broader investigation of the company. It turned out to be one of the most spectacular frauds in U.S. history. For a brief moment, the famously low-profile OWS found itself in the limelight: in the Congressional testimony, Senator Lieberman pointedly asked, "How did you miss the signs that [Off Wall Street] saw?" OWS's model of seeing things differently was validated.

OWS began tracking the aggregate alpha of its short ideas for clients in 2003 -- arguably one of the toughest periods to short stocks. After several years when picking shorts almost seemed easy, OWS suffered a number of big losers in 2003 as global markets ripped. Palm (PLMO), the smartphone maker that vanished shortly after being acquired by HP, went up +82%. The old Shufflemaster (SHFL), ripped +115% (within three years, it had lost 90% of its value again). We somehow managed to eke out 7% short alpha versus the S&P 500 -- with solid shorts on Remec (REMC), a wireless equipment company with shoddy accounting that fell apart, and @road (ARDI), an overhyped, competitively-challenged GPS company, among others. As an institution, however, we learned some important lessons -- be mindful of market cycles and sentiment, always stress-test your theses, and never overstay your welcome in an idea. These lessons are now ingrained in our DNA.

With the passage of the Sarbanes-Oxley Act in 2002, accounting fraud (thankfully) in the U.S. had become more rare. OWS was increasingly shifting its research focus away from outright frauds and toward fundamentally challenged businesses, developing the analytical framework it still uses today. We also started becoming more thoughtful about targeting the right sectors for short ideas. National Financial Partners (NFP) was an excellent example of such a fundamentally challenged business, in the right sector, at the right time - the company was an M&A roll-up of financial advisors whose business model made little sense, and no (cash) profits. When the GFC hit, NFP could no longer obscure its problems - the stock dropped -92% in 2008 and the company had to undergo a debt restructuring. The OWS short portfolio generated a -54% return in 2008, outperforming an S&P 500 short by 15 percentage points.

Everything in the world went up in 2009 -- but OWS actually produced one of its largest alphas yet versus an S&P 500 index short that year (12%). Unlike 2003, we were cognizant of the market environment and shifted our research focus onto structural shorts (like Pitney Bowes, Energizer, and Motorola) that were less market- and macro-sensitive. In 2009, "boring" shorts worked. As a firm, we were getting better at understanding and anticipating the market environment.

Everyone knows that the co-called "FAANG" stocks started their bull market in the 2010s. Fewer people remember that consumer stocks also began an epic run, with the Consumer index more than doubling the performance of the S&P 500 over the decade. In 2011, OWS successfully identified many companies being disrupted by the IT revolution (Monster WW, Shutterfly, etc.), and also identified a big accounting fraud in Diamond Foods, posting its best alpha year to that point (16%). However, given OWS's natural exposure to the consumer sector (where we can apply our trademark on-the-ground field research), the consumer bull market would remain a major headwind, and we would struggle to match our extraordinary 2011 performance in the years to come.

10Y US Treasury yields dropped below 1.5% in Summer 2016, and perpetually low interest rates were driving M&A activity to new heights. These were the most difficult years for OWS. Everything in tech was going up. Consumer businesses were getting acquired left and right. We produced some great ideas for clients, mostly around structural or competition-based setups, such as Tempur-pedic and Coty. But the M&A frenzy meant that even businesses with mediocre prospects were getting taken out at lofty valuations -- for example, we got burned on our recommendations of Panera Bread and Blue Buffalo, both acquired. Our alpha generation remained solid but became more volatile: in 2018, we produced our first-ever negative alpha year versus an S&P 500 short (-1%), even though we still averaged 10% of annual alpha from 2015-19.

Following a brief collapse during the initial COVID outbreak, stock markets were on fire in 2020 and 2021. During this time, sensing that the long 2010s (and their accompanying low interest rates) were over, OWS started moving out the risk curve again in terms of its ideas. While we just managed to keep pace (in terms of alpha) with a rip-roaring market in 2020 and 2021, our strategic shift began to bear significant fruit in 2022 and 2023, as we posted some of our most significant short alpha in the firm's history (with ideas like GN Nord and Fubo dropping 70%-90%). Markets were acting normal again -- and OWS was firing on all pistons.

Our efforts to move out the risk curve -- and to focus more on disruptive areas of technology -- bore meaningful fruit when we published a skeptical report on Silicon Valley Bank for clients in May 2022, noting the bank's cyclical excesses and exposure to a deflating tech sector. Ten months later, Silicon Valley Bank went bust and was seized by the FDIC. This felt like the late 1990s all over again.

In recent years, we have found it increasingly necessary to understand early-stage technologies and innovation "chokepoints" that might disrupt some players (on the short side) or prove beneficial to others (on the long side). As such, we started expanding the scope of our field research, engaging with PhD scientists and technology practitioners. This really started to pay off in early 2022 when we began publishing short ideas for clients that leveraged our unique technology insights -- making an early call on Shutterstock (AI disruption) and giving clients a differentiated short thesis on Plug Power (iridium bottlenecks). As we head into the late 2020s, we expect that deep tech and science expertise will play an ever larger part of our idea generation process.

TRUP marked one of OWS's greatest moments in recent years. This was a stock that many others had pitched as a short before OWS did, only for the stock to continue marching upward. While the others focused only on TRUP's accounting practices, OWS recognized that accounting alone wasn't sufficient. It takes fundamental research and consideration of investor psychology that OWS brings after 30 years of practice. In this case, we recognized that TRUP's revenue growth was likely to slow dramatically and that this would create a psychological catalyst for investors to question the company. The idea worked in spades, with TRUP down -54% in 2Q23. It was an idea that only OWS, with its institutional memory and framework for analysis, could have nailed.

Since we typically work on 100-150 names in any given year and only publish reports on 20-25, we made the decision to begin sharing more of our work with clients, even when that research doesn't lead to a fully-baked investment recommendation. In January 2023, we introduced "OWS Notes," which are our research insights on companies that we have examined but not published as full reports. We are now "opening the kimono" to clients more than we did previously, to positive effect.