The word Hedge is the key word. Assume you think there will be more delays with Interoil and you thus are short say 1,000 shares. The Fund will offset that short postion partially
or in full with a Hedge or a position to balance out that short postion maybe not in whole but enough that if you are wrong you will have enough marbles to play again.So what
does this mean?? It means you most likely use options to Hedge. That means you can buy Long IOC calls is one way . Want proof look at the April 20th expiring calls strike $90
with over 16,000 open contracts. Part of that position is a Hedge Fund offsetting their short position. The good news for us is that same hedge fund is paying to borrow shares and
also is incurring costs to buy calls to partially offset their position with the call buy. Or its expensive being short IOC these days. Further because of these costs when IOC does
announce a deal these same shorts will run for the doors because of the costs. In my opinion watching Interoil trade the way it does that 6 million of the short shares are the
market maker because IOC has never dropped below 6 million short. Post split as IOC is derisked I tihnk that position of the market maker on a prorata basis will drop from where
it historically has been. We will see soon but watching the open interest option contracts gives clues as the real costs of being short Interoil.
