I read an excellent little write-up this morning from Alon Bochman, CFA on the CFA Institute's Enterprising Investor blog. It was called, "Do Valuation Shorts Work?" The writer talks about the two main concerns mainly attributed to short selling: fraud and valuation. By his calculations shorting on fraud concerns heavily outperforms shorting based on valuation concerns. Keep in mind this data is a little biased as it only take into account the best and most well known short sellers.