DataLend has RGR as the top utilization (shares out on loan) at 97.7%, and says fees to borrow have climbed the past few weeks. Is this limted to DataLend or is it market-wide? If market-wide, wouldn't this seem to indicate that there are very few shares left or available to borrow and hence harder for selling for new short positions or adding to existing short positions? If so, wouldn't this tend to lead to a further rise in RGR's price?
This is an interesting topic. I couldn't find much about "hard-to-borrow" fees on-line, or about "utilization." A Google search takes me to DataLend as the only source of information. I wonder how much you have to pay to borrow Ruger shares, so you can short them....Maybe 7% annually...anybody know?
I haven't found much about the fees also. From DataLend's site:
"Fees to borrow are the daily fees borrowers pay agent lenders to borrow a security, denoted in bps. Typically, though not always, higher fees mean a security is more in demand from a securities lending perspective. Fees to borrow are loosely grouped into three categories (which are somewhat subjective and vary by institution):
1. General collateral, aka “GC,” which trades from 0 to 75 bps.
2. Warm, which trades from 100 to 500 bps.
3. Hot, which trades at more than 500 bps.
Fees to borrow depend greatly on the availability of shares to borrow in the marketplace and prevailing market conditions (e.g., earnings, news, etc)."
The site also says RGR remains the top earner in the U.S. I assume they mean from a fee or interest perspective. Above, for a "Warm" stock, 1% to 5% plus collateral and for a "Hot" stock, more than 5%?
Also says the utilization (amount of stock borrowed) was steady. So either shorts not covering or as many new shorts starting?
Cost depends on your broker. Most shorts lately have been naked shorts which means they do not have the shares on hand when they are sold. A very "sketchy" practice that is constantly challenged by shareholders.