RE: Shorts lose shorts ?IMO
I don't think this is a true short position - I think it represents, mainly, the financing means for a very large position in Warrants - for many more shares than the shares sold short.
And I think whoever is doing this is able to margin the long Warrants/short Stock position as a "set", so so that very little real money is required to margin this "investment"
It's something like what is done to leverage the yield on convertible debentures, with a short position in the stock into which the debenture is convertible. You get like 20 time the income from a $1 million investment, because the short poition "sale" proceeds pay for 95% of the long position.And only $1 million is required to margin a $20 million "set", in this case the long side would be $20 million of the convertible debentures. The shorted shares are usually non dividend paying.
Some of the debentures used for this strategy were issued to accomodate it, and the "sets" are sold and bought as "sets". It soen not really matter if the share price goes up, or down, because of the hedge. The only risk is that the Debenture starts acting like a bond because of a downgrade, or other macro event.
But, the ordinary investor can't do this because the "investor" has to have a registration status with the OSC, but he can syndicate the deal with individual investors who are considered "sophisticated" investors - and, there is no need for a Prospectus either.
It only work's if you can margin the short/long position as a "set", because there is a natural hedge, in effect, and the person making/managing the deal is "approved" by the OSC.
And it's only going to be profitable if G's share price increases significantly.
The Goldcorp set of long Warrants/short stock is also a natural for limiting the usual unlimited loss risk of a normal short position.
CONCLUSION: The short position is not going down any time soon, even if G share price increase by a factor of 10!!!
G's share price has already increased significantly, but the overall short position has not gone below 25 million shares.
The limit is that there are only so many Warrants out there that have not already been committed to this strategy!
The irony is that only if G's share price ultimately turns DOWN, from whatever is considered to be it's near peak, will the Warrants be sold and the short position covered.
Whoever is doing this has Patience and is a believer in G, and that Gold is going higher in price - much higher - and that G, because of that AND on it's own merits, is going very much higher too.
These shorts are not going to get squezed!
Just my opinion!
These shorts are not going to get squezed! NEVER!!!! They have the Warrants to get them more than enough shares to cover the short position.