I have been getting emails from a company called Acra Lending. I didn’t know who they are so I googled it. Turns out they are the biggest non-QM lender and it seems money is burning a hole in their pocket.
Winning formula right here: Max LTV * Max DTI & Min Credit.
One more reason to be bearish.
Can short more than the float.
Can long calls that leverage more than the outstanding shares.
These are systemic risk.
Non-QM loans has always been there. Not something new this cycle.
“Can short more than float” is also a nothing burger. When you short one share, someone else is long one share. A long share is created.
Don’t think you are correct.
Think from mathematical first principles.
The sum of all long positions minus all short positions is always 100%. For example, if the outstanding short positions are (as reported/estimated) 140%, then the long positions are 240%. A share can be lent and borrowed an unlimited number of times, each time expanding the long and short positions by 1 share when it is sold - it doesn’t have “I am borrowed” written upon it. Even if some shares are withdrawn from the lending pool in circulation, the others can be relent. So buying stock isn’t necessarily going to move the price as long as someone else is equally willing to sell it or short it. Theoretically then, a stock can be 1000% long and 900% short.
Not supposed to be but it happens, is why is a systemic risk.
Can you tell me what happen if some1 sell a put or long a call?
This is what happens when rates are so low and people chase yield. I know. This time it’s different.