Replies to post #212061 on Biotech Values

[DewDiligence]

Lending shares to shortsellers is one of brokerage firms' most profitable activities. If they're paying you 10% per annum, they're presumably charging the shortsellers at least twice that much. (You might be able to negotiate a higher rate if you're a good client.)

[biotech jim]

Lending out shares...

I was unaware that these sorts of offers existed.

Funny you mentioned that. I started loaning shares of certains stocks I own in my Fidelity account. I made a bunch of money on the loans, particularly with one stock that I held a bunch and people shorted it from the single digits up to its buyout price at $138. (FIDO loaned shares to BofA Merrill Lynch)

A broker I know (no business connection) told me, when offered, to do it. I did, but the shares on loan are shorted, so that may impact your thoughts on the stock, good or bad. My CARA shares were on loan, and I had some called back when I sold some shares. Thank me in part for the shorts having to find new shares to cover.

I negotiated such that they got about 20% on the loans I made. My highest loan rate was 38.5%. That was the buyout stock.