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The structural puzzle around LSGR, the Natixis Loomis Sayles Focused Growth ETF, has shifted in one direction since the last note: the short position that was building through late September has largely unwound, yet the cost to borrow remains stubbornly elevated.
Short interest has fallen back sharply. From a peak of roughly 16,100 shares on September 28, borrowed shares have dropped to around 11,300 as of October 6, a decline of nearly 30% on the week. That reverses most of the climb noted in the previous note, when short interest had surged 39% in a single week. The one-month picture still shows short interest up roughly 87% against early September levels, but at just 0.09% of float, the absolute level is negligible. This is not a crowded short by any conventional measure.
What has not changed is the borrow cost, and that remains the anomaly. Cost to borrow has crept higher again, reaching 13.36% on October 6, up about 5% on the week. For context, this is a fund with over 432,000 shares available in the lending pool and availability so far above the short position that the platform caps the reading at 9,999%. There is no scarcity of shares to borrow. Someone holding this short is paying a double-digit annualised rate for a position they could exit freely, against a backdrop where borrow availability is essentially unlimited. The July and early August episode, when cost to borrow ran above 50% for several weeks before collapsing through mid-August, shows the rate can move dramatically. The current level, while far below those extremes, has now been grinding higher for the better part of six weeks.
The ORTEX short score of 32.3 is undemanding, consistent with the low float percentage and loose lending conditions. The fund itself is up 2.6% on the week and just over 1% on the month, trading at $46.01. With no earnings events, no analyst coverage, and no valuation multiples to speak of for an ETF structure, the only live question here is a mechanical one: why does a freely available borrow command 13% when the lending market shows no stress at all.
The next thing to watch is whether the borrow rate continues its slow grind higher even as short interest stays flat or falls further, widening the gap between the cost of holding the position and any plausible economic rationale for it.
See the live data behind this article on ORTEX.
Open LSGR on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data and reviewed by the ORTEX team. Content is informational only and does not constitute investment advice.
