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Most expensive stocks to borrow and short right now
Stocks that are generating the most revenue for institutional lenders - may be a better list than most expensive stocks to short
After posting lists of the most expensive stocks to borrow and short, I thought that it would be valuable to post a list sorted by the revenue that each stock is generating in the securities lending market. To calculate revenue, I've simply multiplied the market value on loan for each stock by the average fee that brokers (and hence hedge funds) must pay to borrow (and short).
Many blue-chip stocks have very high loan balances because institutions use them as collateral to borrow cash. This is why the securities lending market is also known as the equity finance market.
Many other small-cap stocks have very high average fees, yet because there's not much supply out there, there's no opportunity for most investors to short.
I hope that this list shows the most popular short plays, in that the average fees are relatively high, and the balances that brokers are borrowing are high as well.
The top stock on this new list is AIG. With almost $1 billion worth of AIG stock on loan in the securities lending market, and an average fee in the double-digit percentage points, the daily revenue from lending AIG is substantial. Is there necessarily a reason to short AIG just because it's on this list? No. But I hope that people can use this list to get some new ideas.
Charts of stocks with a big increase in cost-to-short
APRICUS BIOSCIENCES INC
YONGYE INTL INC
DUOYUAN GLOBAL WTR INC
USA TECHNOLOGIES INC
MAGNUM HUNTER RES CORP DEL
