yulleroo 4, page-58

Yes, shorting is clearly the Devil's work. Unfortunately there is nothing that ASIC or the ASX can do. (or are prepared to do - unless there is another financial meltdown). Every argument there is about how shorting destroys shareholder value, increases volatility etc, there are 2 arguments on how it fast tracks an accurate valuation for a company and improves liquidity. I strongly view that the latter arguments are rubbish BUT they get a lot of air time with ASX/ASIC etc

A few qualitative comments on who is lending the stock and why:
1. Index and low risk managers would hold approximately 6% of Buru. They would have standard stock lending agreements to lend out all their stock (they do this to get a fee over approx 0.05% pa). The vast majority of this 6% is available for shorting

2. Mgmt of Buru have vested a lot of options in recent times and (the early ones in particular) I would expect they did derivative deals with a few investment banks to keep most of the upside exposure but also to enable the funding of the option once vested. The scrip is held with the IB's and are thrown in the "stocks to be lent" pool. This could equate to ~5% of stock available to lend

3. Active managers (or substantials) - much of this stock is bought on behalf of Superannuation funds. These guys have automatic stock lending facilities (via their custodians) with most of the investment banks. This could equate to another 12%. ALTHOUGH the smarter active managers would put stops on the lending of their large active positions. I doubt much (if any) of this is available to short

Why did stock lending steadily grow from early 2012? Mainly as BRU hit the ASX200 index. More index investors benchmark against this index (ie more stock available to borrow to then short). Also, once a stock hits the ASX200, it automatically hits most hedge fund screens as "candidates to short".

There is still scrip available to borrow in the marketplace (although the borrowing cost is getting expensive). My guestimate is that there is approximately another 3% of stock available to short - there will eventually be a limit - once this happens...........happy days as any positive news can/will scare the short term shorters.

Shorting is just deferred buying - although in the interim it is sometimes painful