A person I know received an express mail from his broker (Schwab) with a letter suggesting he loan out shares of his thinly traded stock (on the verge of a make or break announcement). They are offering to pay him over $1400/month to borrow the shares and with a return legal express envelope with an authorization signature to expedite the matter. On the one hand it seems shorts are on the verge of forced buy-ins. On the other hand, it seems the shorts are doing everything they can to hold on (or to even short more?), and the last time I know something like this happened the stock shortly afterwards tanked. There are only a few million shares outstanding in the market and stock is selling cheap. In my mind, either explanation is viable and in a way it's like tossing a coin; however, if someone very knowledgeable can share his views would be appreciated. Note that since this information (about Schwab) was posted on a message board, the stock rallied 6%. Please spare the funny remarks.
The person absolutely refuses, as it would supply ammo rope to the shorts to get oneself hanged. The question is if this is a sell signal, and if one should assume shorts are generally knowledgeable tradeable who are better informed than us.