To answer Nightstalker's question as to why MS would be lending out their stock...
Firstly hedge funds are vitally important to investment banks as they make huge sums of money off them. The hedge funds know this and have no qualms asking for the earth in return for their business. As such the bank will do almost anything to keep their business, so lending out long positions is common.
Secondly its important to understand the structure of MS. The hedge fund (Prime Brokerage) business in MS operates in a different entity to the entity which holds LYC long. Now, it is cheaper (eg due to the high cost to collaterise stock loan trades) and easier (as don't have to go out into the market) for MS to cover any LYC shorts by simply transferring LYC from the long entity to the Prime Brokerage entity. The long entity will receive a fee for this and it should be approximately what the going market rate is. If they believe in their strategy they will be happy as they now have extra cash now coming into their PnL while they wait for their bet to pay off.
LYC Price at posting:
$1.22 Sentiment: LT Buy Disclosure: Held
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