Hedge funds queue up to go short of Bankia

A rush by hedge funds to go short of troubled Bankia (BKIA.MC) in recent months has been stymied by a shortage of stock, limiting their gains from the Spanish bank's collapsing share price.

Shortsellers borrow shares they expect to drop in price and then sell them in the market. If the bet works, they buy them back when the price has dropped, return them to their owners, and pocket the difference.

A little over 3.7 percent of Bankia's stock was out on loan as of May 25, up from 3.3 percent in late March, according to data from securities lending research house Data Explorers.

The percentage of shares available to short-sellers to borrow depends on the number of owners willing to lend their shares out for a fee, usually institutional fund managers.

Read Full Article from Reuters

- Posted: 2012-05-29 12:26:52

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