Dead Companies Walking: How a Hedge Fund Manager Finds Opportunity in Unexpected Places

Scott Fearon, a hedge fund manager, explains how to identify businesses approaching collapse and profit from their decline. Rather than fearing business failure, Fearon has built wealth by shorting stocks of companies he predicted would go bankrupt. Fearon identifies six recurring mistakes made by corporate managers that can lead to company failure: relying solely on recent history, depending too heavily on established success formulas, misunderstanding their customer base, falling prey to speculative manias, failing to respond to major industry shifts, and becoming disconnected from day-to-day operations. Drawing on interviews with thousands of executives across America—including Texas oil executives from the 1980s, technology leaders from the late 1990s, and real estate developers from the mid-2000s—Fearon analyzes recent examples such as JC Penney, Herbalife, and Blockbuster Entertainment. His analysis aims to help investors better anticipate future market cycles and financial outcomes.