Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. My plan for my new blog series, Short Stories, is to discuss what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I will describe possible short trades and I'll seek your comments and questions for story ideas. I won't be offering any investment advice and I won't trade on any of the posts I write.

Bradley Pharmaceuticals, Inc. (NYSE: BDY), which acquires and markets products that are too small for big drug companes such as treatments for acne, foot fungus, warts, dandruff, and intestinal problems, has attracted significant short interest. And those shorts are getting badly squeezed. While they have a good case on the fundamentals, there is too much smoke and not enough fire to make the stock go down. I would stay away from BDY altogether.

On the surface, things don't look too bad for Bradley. In the most recent 12 months, it earned $10 million on $143 million in revenues and at the end of June it held $47 million in cash. With a market capitalization of $289 million its stock is up 56% in the last year and it trades at a trailing P/E of 26.5. It could be argued that these shares are overvalued because five analysts who cover BDY predict that its earnings will grow a mere 2.6% from 77 cents/share in 2006 to 79 cents in 2007. But overall BDY does not appear to be in crisis.