Generally they charge a fee or interest. It's usually beneficial because many low risk funds will generally hold long positions, meaning they aren't swing trading or shorting often, and increase profit by loaning out the shares they're holding onto to other sellers that are less risk adverse.
So what does the person loaning their stock out to these hedge funds recieve in all this?
Generally they charge a fee or interest. It's usually beneficial because many low risk funds will generally hold long positions, meaning they aren't swing trading or shorting often, and increase profit by loaning out the shares they're holding onto to other sellers that are less risk adverse.