Borrow Rates

Shorting at 0.90 x 100K shares at 55.99% would cost $139.98 per day, $4,199.25 per month.

It looks more like it's the rate for the day, not for the hour. And it's the rate you are stuck with for the life of your short sale.

Taking my hypothetical short at 0.90 X 100K, Ms. Shortie was charged $139.98 for yesterday and her position went $3,000 into the red. But, if OPK falls back to 0.85, where it's been twice and found support, she stands to make $5,000 less however many $139.98 days it would take to get there. Whoopie.

LAC: Lithium Americas Corp. I searched that headline, and while LAC was not included, there was this:

Latest data shows the largest indicative borrow rate increases among liquid option names include: Geron (GERN) 19.43% +18.59, BioVie Inc. (BIVI) 92.17% +1.14, Bowlero Corp (BOWL) 14.46% +0.75, Globalfoundries (GFS) 1.53% +0.48, Direxion Daily Bear (TECS) 18.31% +0.45, Blackstone Mortgage (BXMT) 1.29% +0.43, Microsectors Fang ETNs due Jan 8 2038 (FNGS) 5.39% +0.28, 360 DigiTech (QFIN) 0.69% +0.28, Alliance Resource Partners (ARLP) 6.98% +0.27, and Enviva (EVA) 53.31% +0.22.

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Today's report for borrow rates: 79.81%, +4.59%.

I wish I had an incisive answer, but honestly I do not know. One could assume that there is pressure on borrow rates if a lot of stock has been shorted against long positions in the converts. And, indeed, $130+ million in the convertible has traded this month. But today's volume of nearly 30 million shares had only two trades (not including opening and closing) in excess of 100,000 share blocks; and no convertible volume reported, at least not during the session.


Of the 130+ million in volume, about 2/3 were buys, implying short sales of stock on the other side to complete the hedge/arbitrage. So maybe the rising borrow rates reflect those trades being put on since 3/8.

While a probable cause, the borrow rates, and the likely concomitant convert volumes, and heavy equity volumes, are all just consequences of the profound short-sightedness of Frost, Rubin, & Logal. It's the only explanation, other than the crazy possibility that they actually want the stock to implode. Which is clearly not the case. So that just leaves stupidity as the explanation for doing a huge convert financing when other options were available. As to their position that it was successful, and brought in new investors, that's just an insult to our intelligence. 

But that's the most salient characteristic of these bozos. They loathe public investors, can barely hide their disdain, and actually think WE'RE the ones who are uninformed. So the pilot and crew crashed the plane on a deserted island, because they really weren't pilots, and then tell the passengers that we're stupid for asking if they at least brought along a short wave radio. 

The company has put out no news of any import, the annual meeting is two months earlier than usual, the stock is under a buck but only the CEO is buying stock. Sure there were insider buys in January, but that looks an awful lot like mere window dressing at this point.

So 30 million shares change hands, and yes, the stock moved up a little. But we're talking about resistance points of $1.06 or something. Then we'll have some propagandist weigh in and tell us that he bought at $0.87 or something, and sold at $1.01, like we're supposed to be impressed, in awe of his trading prowess. Meh.

Opko is a broken stock, because the company management is broken. I could be wrong, but I don't think that Elias Zerhouni got married to Phil to flip the stock he bought in January in the $0.90's when it gets to $1.10. He's lost $100 million dollars, and until he and Gary figure out the reason, their pipeline will remain ignored.

Today a friend asked if I knew LRMR, since it's based very close to where I live. I vaguely remembered the name, but little else. I did a shallow dive and saw that the company is pre-revenue, and has had a reverse (2020). Stock has had a run in the past 4 months, but still well off its post-reverse highs. They did a secondary last month, raising well over $150 million. I have no idea where they are in clinical development. But I did notice that the largest holder bought a huge chunk of the offering. That holder, which now owns 33+% of the stock is a huge healthcare investor, Deerfield Management (more than $5 billion under management, 99% in healthcare). Second largest stockholder is RA Capital. They have nearly 10%. I've mentioned both of these institutional investors on this forum before.

That's real money, deep pockets, involved with this company. As I said, pre-revenue, trading at nearly $500 million market cap. There are dozens and dozens of examples of public companies like this, or with just a product and a pipeline, like ASND, with multi-billion market caps. These facts should make Elias and Gary nauseous. Merck didn't help them. BARDA didn't help them. Frost's millions spent buying the stock didn't help them.

Do the math guys. The answer is right in front of you.

So....the borrow rates are interesting, but that's about it. With Frost in charge, and now having haded the trading keys to the arbs, that's all that matters.