We sat down with Ron Pollack, short-seller and hedge fund manager of the former Dancing Bear (net short) Fund, and asked him about some of his experiences as a short seller.  Ron recounted a story of a company that he said was an example of a “technology hype story”.  Years ago there was a laser company that supposedly had developed a better ophthalmic laser for correcting various vision disorders.  This type of product had been the subject of a lot of controversy at the time due to the relatively low sales volume of the industry leader.  One question had to do with the entire product category:  since the industry leader had only been given FDA approval for certain limited indications, it was too early to say whether the category would ever live up to expectations that it would become the solution-of-choice for nearsightedness, farsightedness, astigmatism, etc.  For the laser company, however, there was an even bigger question:  Did they have a viable product?  They said that they did: one that was smaller, less expensive, safer and more effective than those of the industry leader and other competitors.  But, in spite of the hype, the laser company had yet to provide clinical data that supported their claims.  In fact, at one of the meetings of ophthalmologists, the company was openly chastised by skeptical doctors tired of hearing all sorts of promises from the company with no proof.  The company had said that they had widespread success with their laser in China. Well, Ron’s analyst found a leading Chinese doctor who sat on key government councils, and got a much different story.  The Chinese doctor told the analyst that many of the company’s lasers that had been sent to China were either sitting in boxes, unused and unpaid for, or were being sent back.  To top it all off, the laser company was being sued by the industry leader and another competitor for patent infringement.  It took a while for the hype to yield to truth; but eventually it did, the stock cracked and the company was delisted. 

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