Peregrine Diamonds Ltd. PGDIF

Shorting PGD - Thought Experiement

[schocor]

I love shorting stocks - MJ ones and mining ones in particular have been very kind to me. When you short a stock you are required to cover (pay) the dividends declared, which makes sense. I have never thought about what would be required from the shorter IF a stock were to declare a dividend in rights - as PGD has done many times. Someone who professes to HAVE shorted PGD in the past might have insight into this - although I am pretty sure they would have to have a CDN brokerage account to short PGD so I am dubious about their claim to begin with. As we have fully beat the dilution discussion to death, any comments on shorting/dividends declared as rights etc as they relate to PGD?

[ekim]

Using rights to hedge a short is also fraught with fine print risk. If you read the rights circulars...of which I have in detail....the comapny has a right to withdrawal the rights offering at any time even after distributing the rights. So, if one were to receivve rights, sell there shares and then short an equal amount of shares to their rights holdings...they would be hedged on the face of it

[mill44]

It is only an issue if you hold your position through ex-dividend / rights day. That's the time ownership is  established. Since there are two owners of the same stock, you will have to take care of the owner whose shares you borrowed. As long as you cover before or sell after, there is no problem. If you don't, you most likely would have to buy the rights on the open market and

[cudjo]

If memory serves, there were over 2 million shorts before the last rights closed.  Good luck.