Depends I guess on whether any affected fund has sufficient sway in the market to do that on its own or whether they are all just contributing a bit and therefore have to run with the herd. My business was consulting and there was not always a lot of common sense in the clients. Some were brilliant and you learned from them, but some in surprisingly large organisations were total idiots, and there was often an inverse relationship between how qualified they were and how smart they were. I have zero faith in C class execs making decisions as a group to do anything other than improve their immediately foreseeable personal wealth. Having said that there was also a significant percentage whose great skill was collecting brilliant people around them and then doing what they collectively advised - they were often the ones most successful, so individual brilliance isn't everything.
If I understood the returns from lending shares better I suspect the real strategy would be clearer. My instinct is that the returns are good enough that it is better then the return from holding without dividend income, but not better than a rising price. As Tutor explains it you get the interest/lending fee, plus the collateral that you can then re-invest so you gain two ways. Is it as good as a 2/3 drop - hard to say. It would depend on what else you could do with the collateral.
On the face of it, you could see how with a spare 30mil you could, right now, probably make a gain of about 100mil very quickly by simply starting a run on the shares as soon as there was any positive announcement to work with - say SDV being announced as direct extraction going live in 12 months, for example. If you were the major lender you could start buying aggressively for the first 40c then call in your shares in tranches for the next 80c, selling some of your first wave of buying into the shorts then reusing the money to bust the resistance points at the higher levels then flip and start selling into the flood of FOMO traders at the end. You could do this over maybe 3 months, and be out around $5.
GXY Price at posting:
94.0¢ Sentiment: Buy Disclosure: Held
