Either your posts are confusingly written or I think it’s possible you may be misunderstanding the mechanics.
If you’re say an ASX300 focused ETF that’s forced to hold shares, you don’t get to sell them. You can however lend them out for a fee. But you don’t realise the sale price, the borrower does. They immediately sell (say at $2) and then must return the shares at some point in the future (hopefully for them, they can buy them back at a much lower price, return them, and pocket the difference).
But the ETF is forced to own the shares as long as the stock falls into their index, so they might as well make them available for shorting and earn some sort of fee on the way down. The alternative is watch them go down anyway and not earn anything on the side.
Too many people here seem to think a stock goes down simply because it is shorted. I believe the reverse is usually true. Investors take a short position because they can see the company valuation has detached from reality and will ultimately revert to reality. That has certainly been the case for BrainChip, but it has taken time (and still is - this is still wildly overvalued on normal metrics). What has killed the share price is not the shorters, but multitude of things from the company side: failure to deliver sales, tapping LDA for capital, insiders selling, heavily promotional advertising, etc… all things that would attract the attention of a shorter looking for a pumpy overvalued name to ride down.
That’s my take anyway. Cheers
BRN Price at posting:
31.5¢ Sentiment: None Disclosure: Not Held
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