patrick.net

Patrick says

So maybe the person holding the borrowed shares (the shorter) gets that dividend from the company

I don't think so, as the first thing a "short" does is sells the borrowed shares on the open market. Whoever buys those borrowed shares is entitled to the dividend. The short seller doesn't own the stock again until they "buy to cover" (and give those shares immediately back to the original owner).

Ah! Now I get it.

Thanks @EBGuy

The key is the the shorted shares are out there God knows where, and the person who bought them from the shorter is the one getting the actual dividend payment from the company.

So the shorter is liable to pay that dividend to the person he borrowed the shares from.

That's also kinda interesting because the dividend is being paid out twice in the case of shorted stock. First from the company to whoever bought the shares from the shorter. But then the shorter himself has to pay it to the guy he borrowed the shares from.

Patrick says

That's also kinda interesting because the dividend is being paid out twice in the case of shorted stock.

Yeah, that's something I didn't realize until we had this discussion. It's a "short dividend stimulus" in the overall market.

https://dailycaller.com/2021/06/22/hedge-fund-white-square-capital-gamestop-meme-stock/

A London-based hedge fund that bet against GameStop during the first “meme stock” rally in January is shutting down after facing double-digit percentage losses, the Financial Times first reported Tuesday.

White Square Capital said in a recent letter to investors it would shut down its main fund and return capital following a review of its business model, according to people familiar with the matter. The hedge fund had managed about $440 million in assets during its peak but suffered huge losses betting against GameStop early this year, the Financial Times reported.

Small-time retail investors, coordinating their actions on online forums such as r/WallStreetBets in January, drove up the price of so-called “meme stocks,” including GameStop and AMC Entertainment. GameStop surged from less than $20 at the start of the year to more than $480 at its peak.

Hedge funds caught in the short squeeze, including Melvin Capital and Light Street Capital, incurred substantial losses. Melvin Capital, the largest fund that bet against GameStop, saw more than half of its $12.5 billion portfolio wiped away in January.

zzyzzx says

White Square Capital said in a recent letter to investors it would shut down its main fund and return capital

I presume that this "return of capital" to investors will be a fraction of what those investors put in.

https://finance.yahoo.com/news/ryan-cohen-named-gamestop-ceo-123317063.html

(((Ryan Cohen))) named GameStop CEO

Every single time!!!