Pinned straw:
Macquarie Group Limited ('MQG')
What is Macquarie doing buying into DYL Uranium? - Are they shorting this DYL?
Bear77
Hi @raymon68 - MQG is trading the stock - for a few cents worth of gains often - as shown on pages 20 through to pages 151, and they are also lending some of those shares to shorters - as per the agreement outlined on page 152, and the counterparties (shorters) are listed on page 153. There are plenty of long-short funds and other banks, brokers, and other people prepared to short companies, even though there is clearly a limit on how much you can make going short (along with heaps of risk if you are wrong), and the upside of going long is virtually limitless, but people will still short - often to try to balance risk - in their opinion - against a long call somewhere else for instance.
Becoming-a-substantial-holder-for-DYL-from-MQG.PDF
The MQG trading records (in that announcement, pages 20 to 151) started in mid-November, at prices around $1.20/share, and DYL fell from there to around 96 cents/share in mid-December and then went into a strong uptrend, reaching $1.68/share on Feb 2nd, before going back into a downtrend again from Feb 8th to now. There was money to be made trading the stock clearly, and more money to be made by lending the stock out to Blackrock, Citibank, JP Morgan, State Street, etc, for a fee. And at the end of it all, despite all of the ups and downs, DYL are still a few cents above where MQG started buying in mid-November (at $1.20), and they've been making fees on it throughout by lending it out to those muppets.
Bear77
Hey @raymon68 - Thursday's MoM poddy was focused on shorting:
Will Thompson discusses the "The Fund Manager - Prime Broker relationship" here: https://www.youtube.com/watch?v=0WK6GpDqC5Y&t=1204s
Further Reading: Macquarie Bank themselves have been the target of shorters in prior years - see here: Macquarie Bank response to comments by James Chanos | Macquarie Group [31-May-2007]
And: Short sellers gamble on Macquarie (ft.com) [29-April-2008] [Make sure you refuse to accept any cookies]
I'm not sure if Macquarie are active shorters themselves, because I've now realised that ALL of those "Clients" in MQG's "Securities Lending Agreement" appear to be prime brokers - such as JP Morgan Chase, Citi, State Street, or have a prime brokerage arm/division, like BlackRock and the Northern Trust Company, and shorters often use Prime Brokers as their source to borrow shares FROM, so it now looks to me like Macquarie were either borrowing shares off those prime brokers, or else the prime brokers were borrowing shares off Macquarie to loan to other people such as global hedge funds to short. It seems that the Prime Brokers are the facilitators of the shorting rather than the actual shorters. Macquarie were probably just loaning their DYL shares to those prime brokers - for fees - to satisfy demand for the stock by shorters that deal with the prime brokers to source stock to short.
This one is also good reading: Benefits and risks of short-selling for hedge funds - IG Prime - IG UK
raymon68
Thanks @Bear77 I read the 'Benefits and Risks of Short Selling' - IG Prime..
That go me looking at 'Lending Shares' What is stock lending?
American Article-
https://usecache.com/companion/stock-lending-explained#:~:text=Typically%2C%20growth%20stocks%20attract%20more,stock%20lending%20in%20recent%20years.
Stock lending is when another investor temporarily rents some stock from you. They borrow your shares and pay you a fee for lending to them. There’s no term or lockup, and the lending rate is essentially renegotiated each day based on the market demand.
How much can you earn overall?
Let’s look at an example to see how it all adds up.
As an example, imagine you held a $100,000 stock position, which had an annualized loan rate of 2%. Fees are usually paid monthly, so that would mean about $167 a month in income if the lending rate stayed the same. In fall 2023, short term interest rates are close to 5%, which means you’d receive another $416 or so from interest on the borrower’s collateral – or $583 in total monthly income.
And remember that you still technically own the stock, so you’re also benefiting from any appreciation it experiences while on loan.
Hard-to-borrow stocks can earn even higher yields – sometimes two to three times as much as the stocks in this example.
'Phew' down another educational rabbit hole on this stock lending.