Cost to borrow shares (Questrade)
I thought I would list today's (June 21st) cost to borrow shares (interest rate) provided by Questrade for Aurora and a few other Canadian-listed pot stocks for comparison (for any Americans, Questrade is a low-cost Canadian brokerage). Needless to say, the interest rate reflects the demand for shares to short, as influenced by the supply of shares available to borrow.
ACB.TO 54.59%
by comparison
OGI.VN 66.13%
TGOD.TO 45.96%
APH.TO 31.84%
WEED.TO 19.44%
VFF.TO 9.43%
SNN.CN 4.5%
My first reaction to some of the interest rates is extreme caution. Any firm or individual willing to short at some of those rates would have to be pretty damned confident of not just a pullback, but in some cases, an all but outright collapse. Of course, these are Questrade's rates for June 21th. Other brokers may be lending for considerably less. Also keep in mind that they will fluctuate considerably and may have been driven higher than normal in anticipation of a "sell the news" day.
It could also be that the borrow rates are so high because these are Canadian stocks with a large retail ownership, which could be held in either TFSA or RRSP accounts, making them ineligible for lending). By contrast, most Margin account agreements automatically give the brokerage the right to lend out shares, especially if the margin is being used (and no, putting shares up for sale at a ridiculously high price does not prevent the brokerage from lending them out - even if they sold, the brokerage would still have 2 days to call in any loans before the trade clears).
It may also be that until now, few institutional holders are holding shares due to internal rules governing their investments. Some major institutional firms are notorious for lending shares (Blackrock and Susquehanna immediately come to mind) and are typically the major source of lendable shares. If that is the case, the playing field may change abruptly now that the law has been passed and received Royal Assent.
