If you were fortunate enough to short GXY at $4, then in 12...

If you were fortunate enough to short GXY at $4, then in 12 months, with the share price at $2, the HF has made $2/share, less borrow costs. Borrow costs accrue daily, so if the shares fell over the year in a straight line, then the average price was $3, so at the unusually high rate of 8%, that's $0.24 of borrow costs, leaving a happy HF, still $1.76 ahead.

What about the original long holder? We don't know their entry price, but depending on the deal they have with the lending program administrator, they might be about $0.20/share better off than if they hadn't lent their stock.

It doesn't really make sense to accumulate long whilst short as you're paying borrow costs. You can accumulate anyway. On the other hand, a debt investor may hedge their long credit by shorting stock.