Callidus Capital (CBL.TO) – Why is the borrow expensive?

(*Disclosure: I have no position in Callidus Capital.)

Callidus is currently suing West Face Capital (a hedge fund) and Veritas Investment Research (an independent research firm) for defamation… and I want no part in being sued.  So I will try to be neutral as I talk about my speculation as to why the borrow is expensive.  The first thing that comes to mind is the defamation lawsuit against Veritas, a firm that does not do activist shorting.  Some short sellers really pay attention when companies sue their critics- more so when the criticism was private rather than public.  I’m not saying that short sellers are necessarily right or wrong to bet against such companies- the counterexample would be Fairfax Financial (Fairfax’s stock has done quite well since launching its lawsuits).  But it is certainly something that (in my opinion) attracts short sellers.

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Thoughts on mining (2017 edition)

Some key lessons on mining companies:

  1. They regularly withhold key information from investors.
  2. Technical reports should not be relied upon because many of them are disconnected with reality.

Without key information on a mine’s economics, these companies cannot be accurately valued.  So… mining stocks aren’t a great place to look for longs.  You might spent a lot of effort trying to value a mine and still fall short of being able to find reliable information on that mine.

On the short side, there are some opportunities.

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