RE:RE:a little xtra income for cgx shareholders....Here's the article ..
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Many investors aren’t aware they could be earning an extra 20 per cent or more in income on some of their stocks. Moreover, there isn’t much risk: It’s like discovering some money of yours was in a storage bin you didn’t know existed, and it could be claimed after completing a form.
Take the shares of Electrovaya Inc., a maker of lithium-ion batteries, as an example of how much income can be earned. If you had held a position over the year to Oct. 12, you would have earned a capital gain of 4.8 per cent on the stock itself but if the appropriate form had been filled out, you would have also received daily income adding up to a hefty yield of 40 per cent for the year.
Many investors don’t receive this extra income. They don’t even seem to be aware that it exists. Where does it come from?
When an investor opens a margin account with a broker, they will typically be asked to sign an agreement that allows the broker to lend out securities in the account. The broker can then lend the securities to short sellers and collect interest from them. The interest is charged on the dollar value of the shares for as long as they are loaned out.
“Under current regulatory rules, most brokers keep this interest income,” said Steve Sanders, executive vice-president of marketing and product development at Interactive Brokers Group Inc. On large-capitalization stocks, the interest rate isn’t usually very much. But for small-cap and microcap stocks, a low supply of loanable shares relative to demand can often push up borrowing rates to quite elevated levels.
For example, the five most costly stocks to borrow on Oct. 12 were: Spratt Physical Platinum Trust (171.4 per cent), Sproul Canada Inc. (128.3 per cent), Link Global Technologies Inc. (104.2 per cent), Electrovaya Inc. (85.2 per cent) and CGX Energy Inc. (82.9 per cent). The interest rates will change daily but usually trend in an orderly fashion. For many small-cap and microcap stocks, high lending rates can persist for more than a year.
According to IHS Markit’s Securities Finance H1 2021 review, more than $200-million in revenue was generated by stock lending in Canada during the first half of 2021. That’s no small change.