LSGR, the Natixis Loomis Sayles Focused Growth ETF, keeps throwing up the same structural puzzle noted last week: borrow cost well above 13% on a fund where shares are essentially unlimited to locate.
The borrow story has not resolved since the previous note. Cost to borrow has edged higher still, reaching 13.21% as of September 28, up roughly 8.6% on the week. That is a fraction of the levels this fund carried in July and early August, when cost to borrow ran above 50% for several weeks, but it remains far above the near-zero rate typical for a liquid ETF. The important context is that availability remains cavernous: roughly 798,000 shares are available in the lending pool, and the availability reading is above 7,600%. There is no borrow squeeze here. Shares are easy to find. Someone is simply choosing to pay a double-digit annualised rate to hold a short position in a fund they could unwind at any moment.
What has changed from last week is the direction of short interest. Borrowed shares have climbed sharply. Short interest is up 39% over the past week and 34% over the past month, reaching roughly 15,400 shares as of September 29. In absolute terms that remains negligible, at around 0.12% of the float, and the ORTEX short score of 32.8 reflects a low-pressure setup. But the trend is notable: the position has roughly tripled from early September levels near 5,000 shares. The daily pattern shows a step-change beginning around September 9, when borrowed shares jumped from roughly 7,100 to nearly 12,000 within two sessions, and the position has held above that level since. The FINRA fortnightly official count, settled through September 15, shows 13,200 shares short with a days-to-cover of one day, consistent with the thin trading volume in this fund.
The ETF itself is down about 2.1% on the week and 1.6% over the past month, closing at $44.83 on September 29. With approximately $906 million in assets under management in a concentrated active growth strategy, price moves at this scale reflect the underlying equity holdings rather than any fund-specific catalyst. No analyst coverage, no earnings events and no valuation multiples apply to an ETF wrapper, so the lending market data is the only instrument-specific signal available.
The puzzle from last week remains open: a high borrow cost, ample supply, rising (if still tiny) short interest, and a fund with no obvious fundamental short thesis. The next development worth watching is whether cost to borrow continues its slow grind higher toward the teens, or reverts toward the mid-single digits that more closely match the fund's liquidity profile.
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