I need help understanding something - If a major hedge fund buys 5 M shares, and then proceeds to short them, don't they still own them (they don't need to go to the float to cover), they just cover their own shares. What don't I understand??? I listen about so many days to cover, and I don't understand that either. Can someone please splain to me how the system works as applies to the shorts. All of the big guys are shorting, not the retail buyers. Retail buyers are not involved in 29 M shares. ( P.S. - I checked my spelling and am just fine with SPLAIN ). Thank You !!!!!!!!!!!!!
Dr. Woodside, Wikipedia does a very good job explaining the whole shorting process...I do not believe that one can borrow to short against their very own long shares. I think that they have to borrow OTHER lended out shares. So what might be going on here with 27 fri-kin million shares short? Well, I still think there could be an "against, or outside the box" strategy taking place(essentially, the same firm(s) taking on both sides of the trade). In any case, its a way to lock in tremendous gains and not pay anything more than cap gains rates..You see, it's reckless financial suicide to be short-only this biotech..
So, with ALL that said, 27M shares NEED to be covered and the volume has slowed down to a trickle...Not a very good time to put on the shorty/longy thingy......
A firm that is long may very well be involved in buying for individuals through mutual fund holdings. Shares that can be shorted are any shares that have been purchased via margin, and the individual may or may not have been contacted prior to their shares being sold short. Either way the shares purchased short (meaning they will be sold to a party with the intent on being purchased back at a cheaper price) can be bought back at any time at any price at a loss or a gain, depending on market price at time of repurchase. What is not greatly understood is who is doing the shorting. That is all that really matters. Transparency would greatly illiminate shorting of profitable companies but then the banks, mutual fund companies and hedgies would not be showing the profits they currently have. We all know who the crooks are, we simply have zero recourse to prevent the crooks from continuing to rob us blind.
You can short your own shares. It is called "shorting against the box". That normally is being used as a hedge if you want to protect previous gains without selling the stock (normally for tax reasons).