Long Run Explor Ltd Ord WFREF

RE:RE:RE:RE:Change strategy!

[iwpete]

from an accountant!
Short selling is hard enough to get your head around without getting into all the particulars.  If you have a basic understanding of short selling, then you probably know that as a short seller, you are required to make up for any benefits a long investor would receive if he or she had actually owned the stock.
When you short a stock, you are borrowing the stock from an investor or broker, then selling those shares on the open market to a second investor.  Even though you borrowed and sold the shares to another investor, the transaction between you and the lender is still listed on the books as if the lender is still long the stock and you are short on the stock (even though that person no longer owns the stock).
Because that original investor who was kind enough to lend you the stock is no longer an actual shareholder with the company, the short seller is required to make up for any benefits the investor would have recieved had he or she actually owned the stock.
In other words, if a company pays a dividend to shareholders, the second investor who bought the shares form the short seller would get the dividend check from the company.  But because the original investor is no longer a sharholder of record (because the second investor owns those shares now), then the short seller must pay the dividend out of his or her own pocket.