The Many Mysteries of Shorting:Invalid Short Reports? Why Shorts Pay Over 100% Interest? Etc., Etc.

Discussion in 'Trading' started by darp, Feb 3, 2019.

  1. sle

    sle

    It's not about the fractional short interest, it's about the availability of stock to borrow.

    A lot of institutional investors and other big holders do not like lending the stock because that depresses the stock price. So the short interest is low and short rebate is high for stocks with high institutional ownership. That is different for stocks held by hedge funds via their primes, stocks that are part of large ETFs and stocks with high retail ownership. Most retail investors hold the stock in a discount broker who usually had a stock lending agreement as part of the user agreement. It's part of the discount brokers model, they charge the rebates from their shorts but do not pass it to the longs. Same with stocks held by ETFs or lower-end prime brokers - they use the borrow rates to juice up their returns.
     
    #11     Feb 5, 2019
    ironchef, darp and ajacobson like this.
  2. abnormal

    abnormal

    [​IMG]
     
    #12     Feb 5, 2019
  3. darp

    darp

    sle, thanks. That makes sense. However, these super high lend rate stocks that NASDAQ claims have very small short positions, yet the market says have huge short positions and thus 80%, 100%, 120% interest rates are not institutionally owned stocks. Take RNKLF, outside of Eric Sprott buying over 10% Yahoo lists 0.05% owned by institutions Douglas C. Lane & Associates, LLC 190,000 Dec 30, 2018 0.05% 91,200

    AIPT at 106% interest rate is
    % Held by Institutions 3.45%

    It is the least held by institutions that have the highest interest rates.

    And the opposite, take CVNA, super high institutionally held,
    Top Institutional Holders
    Holder Shares Date Reported % Out Value
    Spruce House Investment Management LLC 4,870,000 Sep 29, 2018 14.22% 287,768,300
    Vanguard Group, Inc. (The) 2,621,582 Sep 29, 2018 7.65% 154,909,280
    Blackrock Inc. 2,099,988 Sep 29, 2018 6.13% 124,088,290
    CAS Investment Partners, LLC 2,056,159 Sep 29, 2018 6.00% 121,498,435
    Goodnow Investment Group, LLC 1,722,320 Sep 29, 2018 5.03% 101,771,888
    Sylebra HK Co Ltd 1,603,356 Sep 29, 2018 4.68% 94,742,306
    683 Capital Management LLC 1,561,634 Sep 29, 2018 4.56% 92,276,953
    Melvin Capital Management LP 1,400,000 Sep 29, 2018 4.09% 82,726,000
    Point72 Asset Management, L.P. 1,169,184 Sep 29, 2018 3.41% 69,087,082
    Whale Rock Capital Management LLC 1,142,177 Sep 29, 2018 3.33% 67,491,238

    Yet CVNA is 52% shorted of all stock! And as guessed so it is so extremely shorted and in extreme demand by shorters, the interest rate is tiny, and sure enough https://iborrowdesk.com/report/cvna the interest rate is only 2%

    Whatever makes sense and follows the laws of economics and logic is the opposite of the truth in the Short World. Everything seems to be backwards and upside down. Welcome to the Twilight Zone.

     
    #13     Feb 5, 2019
  4. darp

    darp

    Abnormal, on that list what do you make of it?
     
    #14     Feb 5, 2019
  5. zdreg

    zdreg

    net short position- e.g. 0,5 what does this say? is0,5 =.005 or .05
     
    Last edited: Feb 5, 2019
    #15     Feb 5, 2019
  6. abnormal

    abnormal

    in Italy there is an obligation to report when taking short
    positions greater than 0.5% of capitalization. I do not know if it's an esma directive.
    I've never seen it done in other European countries.

    When they report the overcoming of 0.5% it is unknown if they
    have just started and if they will continue to short or if they are
    preparing to liquidate to leave the position. Surely they will find
    less expensive systems to borrow stocks. However they are required
    to notify the variation every day at 16.00 Italian time.

    so if you then see 0.40 0.30 it's because they start moving

    http://www.consob.it/web/area-pubblica/pnc
     
    #16     Feb 5, 2019
  7. zdreg

    zdreg

    e.g.please explain what 0,59 from carlson represents?
    are we talking about their entire portfolio of the hedge fund or one individual position?
    is 0,59 = 59% 0r 5.9% or something else?
     
    #17     Feb 5, 2019
  8. abnormal

    abnormal

  9. darp

    darp

    Thanks Abnormal!
     
    #19     Feb 5, 2019
  10. darp

    darp

    OK the RNKLF situation even became more untenable today for shorts. The expert billionaire gold stock investor is buying RNKLF like crazy in open market, over a million shares per day average last two days.

    Recent filings
    Filing date: 2019-02-04

    Transaction: 2019-01-30 $RNX
    Royal Nickel Corporation Sprott, Eric S.
    3 - 10% Security Holder of Issuer
    Common Shares
    10 - Acquisition or disposition in the public market $417,671.10
    +676,500
    vol
    $0.6174 each 47,913,542
    Filing date: 2019-02-04

    Transaction: 2019-01-30 $RNX
    Royal Nickel Corporation 2176423 Ontario Ltd.
    3 - 10% Security Holder of Issuer
    Common Shares
    10 - Acquisition or disposition in the public market $417,671.10
    +676,500
    vol
    $0.6174 each 47,913,542
    Older filings
    Filing date: 2019-02-01

    Transaction: 2019-01-28 $RNX
    Royal Nickel Corporation Sprott, Eric S.
    3 - 10% Security Holder of Issuer
    Common Shares
    10 - Acquisition or disposition in the public market $252,000
    +400,000
    vol
    $0.63 each 47,137,042
    Filing date: 2019-02-01

    Transaction: 2019-01-29 $RNX
    Royal Nickel Corporation Sprott, Eric S.
    3 - 10% Security Holder of Issuer
    Common Shares
    10 - Acquisition or disposition in the public market $63,000
    +100,000
    vol
    $0.63 each 47,237,042
    Filing date: 2019-02-01

    Transaction: 2019-01-28 $RNX
    Royal Nickel Corporation 2176423 Ontario Ltd.
    3 - 10% Security Holder of Issuer
    Common Shares
    10 - Acquisition or disposition in the public market $252,000
    +400,000
    vol
    $0.63 each 47,137,042
    Filing date: 2019-02-01

    Transaction: 2019-01-29 $RNX
    Royal Nickel Corporation 2176423 Ontario Ltd.
    3 - 10% Security Holder of Issuer
    Common Shares
    10 - Acquisition or disposition in the public market $63,000
    +100,000
    vol
    $0.63 each

    RNKLF shorts have much more to fear than the longs, the list goes on and on, 1. Longs get 75% interest, Shorts pay about 150% interest (both at IB, half that at Etrade), which has more staying power? Who has time on their side?
    2. Who has more to fear from news? The initial gold strike caused a 15 bagger and fast. No news has crushed Longs, a hint.
    3. Who has more to fear from a big player, is there a billionaire on both sides or just one side?

    The irrationality of a short position in RNKLF is separate from the irrationality of short interest being higher for lower demand stock than higher demand stocks, just another mystery in the Short World.
     
    #20     Feb 5, 2019