Hard-To-Borrow List

When short sellers...sell short, they borrow stock from the brokerage underwriting that short. The brokerages make a small fortune on "the borrow," or the interest rate they charge to their clients for borrowing the money, under which the brokerage can then sell those shares short on behalf of their client.

So why would something be hard to borrow? Well, what if the stock was extremely volatile? Like...take out or acquisitions rumors swirled perpetually around it? One day, a huge print up of $5 when it was sure GOOG was buyin'; then, when GOOG denied, the stock tanked. And since the stock was highly leveraged, the price gyrated regularly from $27 to $80.

And then the client wants to short it at $32.

Well, if the stock goes nuts on the upside, like...say it kisses the century ($100)...well, then the client is in the hole for $68 a share.

That huge swing could make the client more than bankrupt, and put the brokerage on the hook for settling debts. So duh. Shares like those for a short seller would, of course, be hard to borrow. Lots of other reasons: Things like shares being illiquid, or newly IPO'd companies without established trading patterns and partners, and a bunch of other reasons make shares hard to borrow. But brokerages do, in fact, keep a list...and check it twice.