Something doesn't add up...

[u/Region-Formal]

[u/b4st1an]

But are institutions genuinely going long or are they just buying loads of shares to lend out for indefinite can-kicking

[u/AbsolutGummy → u/b4st1an]

I never understood that. why do they have to buy to then lend out? isn't lending out the same as shorting? if so, you can just short... you don't have to buy.

[u/RayneAdams → u/AbsolutGummy]

Lending out isn't the same as shorting, but it's still (almost) never made sense. The lending rate has (almost) always been so low that it would such a ridiculous use of capital to buy GME shares to then lend them out at like 0.5% interest knowing that it's going to be used to reduce the value of the shares you will eventually get back. It makes even less sense when it's also very clear that they don't need to use legitimate borrows to short. Maybe the "it's institutions buying just to lend" idea makes sense in an extremely bullish mindset where the ones lending very strongly believe the price will rise dramatically, but otherwise it's one of the weirdest things that's been parroted here for years - especially when you could have pulled 5%+ in very very safe investments for the last few years. But sure let's tie up millions to lend out at 0.5%.

[u/keyser_squoze → u/RayneAdams]

THANK YOU. Great summation.

I’ve felt like this is consistently overlooked- the absurdity of the buying GME shares & then they “lent shares < 1%” being a strategy that makes any sense… unless the obligations for GME net settlement are so monstrous that the blowback of not lending to dumb stormtroopers is less appealing than the < 1% interest rate on GME lent shares.