RE:RE:RE:SGY short position continues to increaseCanadianBuck wrote:
I was told that a large number of shorts on Legacy reflected a complex financial construct that allows some institutions to convert interest income into tax-advantaged dividends. Possibly the large growing short position in SGY could be explained partially by this type of transaction?
So you are mad at me about my comments about your post regarding increase in SGY short position ?
Shorting SGY for interest income does not make sense. Further to my comment on the subject. The risk involved does not justify the exposure for little to no interest income return. Brokers have different rules for short selling. Some charge a fee for borrowing a stock & do not pay any interest on the proceeds of a short sale. These day when Bank of Canada's over night rate is only 1/2 % brokers pay no to not much interest on credit balances. Some brokers are only offering .25% interest on special deposit account where funds are separated from margin account.
When you can get no to little interest & may have to pay for borrowing shares plus pay $.025 per share monthly dividend it is not cost effective with lot of risk to short SGY just for interest income.
SGY dividend yield is now 11.54 % per annum. Which is close to about 1 % monthly cost for the short seller. No broker pays 1 % interest on deposits / free funds these days.