Ann: Update - Notification of buy-back - KAR, page-27

Shorting.Need to borrow the stock.
Cost per annum for KAR (as an ASX200 stock) would likely be around 1.0%.
As CEO points out, this is profit for the Lender.

Where to Borrow (or where your broker borrows).Custody company's holding.
Maybe EFTs.
Australian Superannuation funds.

What's in it for Superannuation Funds (at least partly passive, therefore hold KAR).

Generates additional income/return from estimated 1.0% short lending fee per annum.
However, the cynic in me would point out the following.

1. Assume that fund is passive, has KAR holding at market weight
2. Irrespective KAR price action, fund gets market return (by definition)
3. Lends KAR out generating additional income for the fund and its' members
4. ASX200 Market Performance plus Short Lending Fees = Fund outperforming ASX200.
5. Resulting in Fund Manager beating their Benchmark, meeting a KPI, and qualifying for their BONUSES.

If cynical me is correct, then it is possible that some Fund Managers don't care if facilitating short selling has a negative impact (which I believe that it often does) on the overall return for fund members.

In their defense, if they didn't lend the stock, then someone else would. However, the less stock lenders, the harder it becomes to source script, which for a smaller company like KAR, which then increase the borrowing cost (maybe to 2% p.a.) which then makes KAR less profitable, and less desirable as a Short Sell target.