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Originally posted by WhatiFOnly:
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Sorry about the formatting but got this via the page source:Two of the nation’s largest superannuation funds appear to be facilitating bets against the success of two eminent critical mineral companies that share Gina Rinehart as a major shareholder. The West Australian understands Rest Super and Aware Super have been lending out shares they own in Lynas Rare Earths and Liontown Resources. Based on recent disclosures from the US-based giant State Street Corporation, which acts as a custody nominee for both super funds, Aware has lent nearly 36.1 million Liontown shares and Rest over 1.2 million, which at Friday’s closing price is worth a combined $32.8m. Aware has also given 1.14m Lynas shares to borrowers and Rest has done the same with 1.1m shares, combined worth nearly $13.6m. Borrowed shares are used almost exclusively for short selling, a process that aims to profit from a company’s share price decline. Short sellers borrow shares and then sell them with a buyback obligation at a later date. If the repurchase price is lower than what the shares were sold for the short seller pockets the difference after paying the lender any interest owed. The details of the purported shorters using Aware and Rest’s stock was not disclosed by either super fund and both have declined to provide figures about the total number of shares in Lynas and Liontown they have lent. Aware owns 5.26m Lynas and 10.13m Liontown shares according to Bloomberg data, while Rest’s holdings are not known. As of Wednesday’s close of trade Liontown is the third-most short sold stock on the ASX with 11.7 per cent of its shares in the hands of shorters. Lynas is in sixth position with 10.7 per cent controlled by detractors. That shorting interest has risen sharply for both companies since the start of the year. Liontown has been stung by tumbling lithium prices and a volatile funding situation to build its flagship Kathleen Valley mine, while Lynas is fighting a depressed market for rare earth elements. Both companies share Australia’s richest person — Gina Rinehart — as a big backer. Mrs Rinehart’s Hancock Prospecting is the largest shareholder of Liontown via a 18.1 per cent stake and has been recently snapping up Lynas shares. Hancock holds 7.1 per cent of Lynas, the company’s number three shareholder — not far behind State Street and AustralianSuper. The share lending move by Aware and Rest is also intriguing from a political standpoint. Federal Labor has championed a strong national critical minerals industry, introducing subsidies and incentives that are designed to benefit miners like Lynas and Liontown. Federal Assistant Treasurer Stephen Jones did not respond to a request for comment. Wilson Asset Management portfolio manager John Ayoub said stopping super funds from lending their stock out would do little to end short selling, as large asset managers would free up more of the shares they own for shorters in order to capitalise on the demand shortfall. “I think at the end of the day, it’s not going to stop the shorting taking place if the super industry stops, because you’re never going to stop BlackRock, you’re never going to stop State Street, you’re never going to stop Vanguard from making their stock available with the lending pools,” he said. “Because that’s just part of their business, and it’s an effective part of their business. So I guess you can heap pressure on the super funds, but it’s not going to change the outcome.
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With the amount of money hedgies have which has significantly increased from gfc and covid QE, markets have now become faulty because SP supression can last longer than retail investors and the ability of the smaller players acting alone.
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