Now that traditional alpha generation is long dead courtesy of central planning, and even levered beta no longer works as a strategy at least until such time as Benny and the Inkjets return with a whole printer cartridge full of goodies for the uberwealthy, and that old "sophisticated investor" go-to staple - insider trading - is no longer an option courtesy of the clamp down on "expert insider information leaking networks", what is a hedge fund to do to justify ridiculous terms such as 2 and 20 (or 3 and 45 in some soon to be Wall Street criminal folklore cases)? Simple: run, don't walk to Bank of America Merrill Lynch Countrywide and demand an immediate, if not sooner, hook up to the "Securities Lending GM Portal Locate System (SLGPLS)." Why the SLGPLS? Because it is the last remaining way to make money: isolate companies with large short interest and create a major covering spree. From the horse's mouth: "We are offering a brand-new technology for prime broker clients giving them the ability to do locates via the web. It is a user-friendly system that features instantaneous easy to borrow (ETB) locates and hard to borrows (HTBs) that are delivered to our securities lending desk personnel desktop. Additionally, clients have the ability to get color and email alerts on a select list of securities." Translated: BAC, seeing plunging PB revenues now that everyone is departing this bloated scam of a bail out with hundreds of billions in toxic RMBS, is offering the holiest of holies straight to the end user (for a price): all the names, that with just a little buying prod, would likely surge as shorts get spooked an cover en masse.
Easiest way to make money: buy all the HTB names and tell your neighbor to do the same. Then watch as the basket surges once the buying interest overwhelmes the max pain level for the shorts, especially as forced buy-in notices start flooding in, once lent out shares are recalled.
If nothing else, this, in addition to all other methods already undertaken by the Fed and the administration, will almost certainly destroy any interest to be short the stock market which will be great for a short-term rally, only to result in the biggest ever sell off once everything starts plunging and there is no natural buyer at any point above zero.
Frankly, we can't wait until every single bank offers this service to Prime Broker clients and the only strategy left in the market is to burn the shorts. That will be the true beginning of the end of US capital markets.