Borrow Rate
The borrow rate is the annual percentage rate that someone pays to short stock. When you short stock you're actually borrowing the shares from your broker and then hoping to return those borrowed shares back to the broker at a lower price. In some cases this borrow rate can be punitive.
When performing due diligence it is important to pay attention to things like the borrow rate and the number of shares available to short. Very often hedge funds will target a stock for short selling simply because it already has a high short interest. Not all hedge funds are created equal and many will simply follow the herd. This can be dangerous as the herd is sometimes wrong.
Short Shares Available
These are simply the number of shares that are available to short for a given stock. Like any commodity there is an inverse relationship between the availability of something and its price. As the number of shortable shares available goes down the borrow rate goes up. And when the short shares available gets to zero, well, lots of interesting things can happen.
Stocks With Highest Borrow Rates
With all this in mind I want to share the current list of stocks with the highest borrow rates on
shortablestocks.com
| | Symbol | Name | Borrow Rate | Short
Shares
Available | Last updated |
|---|
| 1 |
FAZE
| FAZE HOLDINGS INC | 1058.11% | 10000 | 2022-09-07 09:00:04 |
| 2 | | GETTY IMAGES HOLDINGS INC | 913.90% | 20000 | 2022-09-07 09:00:04 |
| 3 |
PGY
| PAGAYA TECHNOLOGIES LTD -A | 816.57% | 8000 | 2022-09-07 09:00:04 |
| 4 |
TGL
| TREASURE GLOBAL INC | 769.35% | 150000 | 2022-09-07 09:00:04 |
| 5 |
GSUN
| GOLDEN SUN EDUCATION GROUP-A | 652.16% | 2000 | 2022-09-07 09:00:04 |
| 6 |
MCR
| MFS CHARTER INCOME TRUST | 618.61% | 10000 | 2022-09-07 09:00:04 |
| 7 |
HYDW
| XTRS LOW BETA HI YIELD ETF | 567.10% | 25000 | 2022-09-07 09:00:04 |
| 8 |
IHIT
| INVESCO HI INC 2023 TRGT TRM | 542.42% | 9000 | 2022-09-07 09:00:04 |
| 9 |
ZIONP
| ZIONS BANCORPORATION FLTG RATE SER A PFD | 542.42% | 25000 | 2022-09-07 09:00:04 |
| 10 |
EVTL
| VERTICAL AEROSPACE LTD | 497.86% | 10000 | 2022-09-07 09:00:04 |
| 11 |
EVEX
| EVE HOLDING INC | 476.54% | 4000 | 2022-09-07 09:00:04 |
Now these borrow rates are punitive! Imagine having to pay over 1000% per year to maintain a short position. No one could do that for long. Undoubtedly at least some of these are troubled companies that deserve to be shorted this heavily, but maybe not all of them. And even if the people betting against them are right they may not end up making much money on their trade given these borrow rates.
Potential Opportunity
This is where the chance to make money on this information comes in. Pagaya Technologies (
PGY), for example, was all over the news a couple of months ago and had a strong rally. Their prospects seem good based on what the company said during their most recent conference call so why all the negativity? Maybe it's just a case of a stock going too far too fast or maybe it's something else. In any case, it's important to keep track of the borrow rate and short shares availability as part of the due diligence you perform for all of your stock holdings.
