Brainchip Short Discussion, page-103

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15/09/23

19:44

Post #: 69880151
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Originally posted by mapp: ↑

Ok I think I am beginning to understand the shorting process.

Shorters borrowed shares from brokers for a fee. I understand the fee is around 18%pa. The shorters then sell the shares on market. At this stage both the original owner, who may be unaware of the transaction, and the shorter have a beneficial interest in the shares

In April 2022 the RBAstarted increasing interest rates.

Using BRN as anexample.

Lots of people, cashed up because of COVID and sick of 0% interest looked around and decided the share market was a good place to invest. Some where careful and decided to invest in index funds, others were more adventurous and followed momentum investing.

BRN was going up so it looked like a good bet. BRN greatlyincreased in price as a result of some good stories.

In January 2020BRN (Shorts 0.02%) was $0.05. In January 2021 BRN (Shorts 0.07%) was$0.50 as a result of some significant technical achievements. InJanuary 2022 BRN (Shorts 2.50%) spiked to $2.00 as a result ofglowing reports by Mercedes engineers.

In April 2022 the RBAstarted increasing interest rates.

Profit taking saw BRN (Shorts2.63%) fall to $1.00.

In 20 June 2022 BRN(Shorts 4.44%) was added to the S&P ASX 200 index. Index fundbuying push the price to $1.10 as the funds bought 100,000,000* BRNshares. (*guess anyone know the true figure).

Shorters engaged intactical selling that lowered BRN’s price. Many BRN holders whereaffected by the increase in interest rate and seeing a falling pricesold out. Investors interested in buying BRN decided not to catch afalling knife.

The tactical selling in effect was in shorters takingnew position selling to other shorters getting cover. The fall in BRNshare price neatly matching the increase in percentage shorted.

InAugust 2023 BRN (Shorts 8.20%) price fell to $0.27. The total numberof shorted shares was about 130,000,000.

20 Sept 2023 BRN(Shorts 7.3%) $0.30 was removed from the S&P ASC 200 index . Theindex funds needed to rebalance .

This is where themagic happens. I don’t understand. The index funds sell the shares,the shorters buy the shares to return to the lender. This cross trade happens off market. (Can someone explain how this works?)

The result being theindex funds have lost about $70,000,000 and the Shorters made$70,000,000 less costs.

The index fund managers don’t have to worryabout the loss because they are just following the index. Theinvestors in the index fund are none the wiser.

The whole processhas benefited me because I managed to top up @$0.28 and will hold andenjoy BRN’s progress.

Expand

That's not correct at all.

There are numerous educational resources out there that explain the shorting process very clearly (I recall they've been shared with you before).

There is way more disinformation about shorts on HC than facts - it's startling.

It will be interesting to see the effect on BRN's liquidity now that many shorts are out.

BRN Price at posting: 29.5¢ Sentiment: None Disclosure: Not Held
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(20min delay)
Last 17.0¢		Change 0.000(0.00%)		Mkt cap ! $333.6M

Open	High	Low	Value	Volume
17.0¢	17.5¢	16.5¢	$2.068M	12.16M

Buyers (Bids)

No.	Vol.	Price($)
73	2921940	16.5¢

Sellers (Offers)

Price($)	Vol.	No.
17.0¢	15034	2

View Market Depth

No.	Vol.	Price($)
71	2909205	0.165
93	2221982	0.160
29	1044798	0.155
96	2736833	0.150
9	542806	0.145

Price($)	Vol.	No.
0.170	15034	2
0.175	1211864	23
0.180	1620405	19
0.185	381997	18
0.190	617305	10

Last trade - 16.10pm 28/08/2024 (20 minute delay)

BRN (ASX) Chart

Brainchip Short Discussion, page-103

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Brainchip Short Discussion, page-103

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