One of the most nauseating facts about Carillions collapse..not alluded to on here..is the way 'Shorters' have made over £200 million out of Carillion.
Shorting means buying shares usually in their tens of thousands if not hundreds..dumping them on the market inthe hope that prices fall. Which is what inevitably happens. Then buying them back or selling them on at a much lower price pocketing the difference.
This has been a major factor in Carillions & other Companies demise. Shorters in effect collapsing companies and making a fortune.
It's a shameful practice and had been going on for over 35 years since controls to stop it were removed.
There are companies (so called 'Hedge Funds') that are set up specifically to short shares..Targeting companies that are in trouble and collapsing them in order to make a small fortune.
Billions of pounds are made every year by a handful of people at the expense of hundreds of thousands of job
And as far as PFI is concerned it's an absolute shocker..PFI projects costing up to 40% more than public borrowing.
The cost to the taxpayer of PFI could be over £200 billion.
Shameful.
The most annoying thing about shorters is that the shorter doesn't even need to own the shares, they just 'borrow' them from their mates in the city.
It is usually corporate investment companies which do this and they borrow the shares from other, similar bodies who, in truth, also don't own the shares as they are usually holding them in trust for private investors, or pension funds and their like.
So, if I buy 1000 shares in Gizmo Corp Plc at 100p each they will be held in trust for me by my broker.
The brokers mate comes along and says 'we are going to run a short on Gizmo, can you help (for a similar favour back to you in the future)?
My broker says 'yes, we hold 1 million shares on behalf of clients which you can borrow for 90 days'.
Shorter says thanks very much, offers the shares in small order batches at their current market value which usually get snapped up by gullible private investors like me.
As a result of the increased liquidity and availibility of the share, the price usually drops, this often triggers a load of stop-losses on the share which then make the shares available for the shorter to re-buy at the lower price. My stop-loss may have triggered and sold my shares at 90p costing me 10p per share.
He then gives them back to where he borrowed them from and pockets the profit.
And all the while he never actually owned the shares, but borrowed them from the people who are supposed to be looking after them for me thus using my own shares to drop the price and trigger a loss for me, and a profit for himself.
(the numbers would be bigger than a few thousand shares here or there).
If you want to see which shares are being shorted, take a look at Short Tracker here.
shorttracker.co.uk/companies/Click on the '% short' column to get them in order, and click on the company name to see who is actually playing the shorts.
You'll see that Debenhams is currently the most shorted share and clicking on their name will show who is shorting it.
Clicking on the shorters name will also show you the other shares they are shorting so clicking on BlackRock Investment Management (UK) Limited (the biggest shorter of Debenhams at the moment) shows that they also have shorts open on TalkTalk, Wetherspoons, Sainsbury's, Greggs and the AA among others.
(click on the column heads to change the display order)