I just received a short report from Citron Research (another financially uber-astute easyDNS client 😉 ) which outlines a scathing short thesis for Web 2.0 real estate darling Zillow (Nasdaq: Z).

After successfully predicting short side windfalls for Zynga, Groupon and yes, even Facebook but never getting around to actually shorting any of them, I have to admit that I am tempted. One thing that does give me pause however is that Zillow is already heavily shorted with a short interest at an astounding 45% of the float. The Citron Research report acknowledges this:

Citron acknowledges that Zillow is a high short interest stock — that being for a reason. This purpose of this article is not to cause a sudden drop in stock price. Rather we just want to be on the same side of the counter as management, the people who know best — we are net sellers of the stock. In time, sooner than later, the stock will unwind and will head down toward a realistic multiple. We think that level is in the teens and ultimately the single digits.

(emphasis mine)

Read the Citron Report here.