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How are spinoffs handled in short funds?

April 26, 2017funds handled short spinoffs

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How are spinoffs handled in short funds?

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If another stock is spunoff, that becomes a new short. For example, suppose your fund is short 100 shares of stock FOO. If stock FOO spunoff BAR at a 1:1 share ratio, your fund would be short 100 shares of FOO and 100 shares of BAR.