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hncommenter13 | 5 years ago
Imagine a company with 1 share outstanding. I borrow a share from Person A, and I sell it to Person B. Person A and Person B now both own 1 share, and I own -1 shares. The total shares outstanding is still 1 share (2 + -1), but the float has increased. The short interest, as commonly reported, will be -100%. But it's actually only 50% of the shares that could trade. The effective float has increased by the size of the short interest.
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