This narrative needs to stop. This is institutional investor shorts vs intentional investors stockholders. Retail is just along for the ride but the institutional shorts did something crazy so other large funds came in like Michael Burry’s and bought large positions. This happens every once in awhile where other institutional investors see an opportunity to take out competitors who is over leverage.
So just sit back and watch for the margin calls to go out and GameStop will skyrocket to something ridiculous while the shorts try to unwind their position. Still don’t get how this mess is going to get cleaned up since it’s impossible for the shorts to cover.
> Still don’t get how this mess is going to get cleaned up since it’s impossible for the shorts to cover.
A deep pocketed long term large fund can buy the short position at a discount, a bit like distressed debt, and then just wait it out. It's a guaranteed win if you have deep pockets.
Note that when they buy the position, they don't also inherit the current mark to market loss, only a part of it (the price they pay).
What is a fair price for this position? I would love to know if someone has any insight on this.
But this isn't a narrative any of those institutional investors seem to believe. Michael Burry himself says that the current rally is "unnatural, insane, and dangerous", reports that he's closed his position, and is calling for legal and regulatory fixes to prevent this kind of situation from happening in the future. (https://www.bloomberg.com/news/articles/2021-01-27/michael-b...)
They aren't trying to kill GME though, they are boosting it, essentially saving it and shareholders from short seller pressure. I see it as a bizarre, but ultimately positive behavior. Wallstreet no longer holds all the keys.
Interesting to see this comparison being made on hacker news, it was also made on my economics RSS feed where Tyler Cowen[0] linked to a tweet[1] with this exact same comparison.
Not sure why you're getting down voted, when the article makes clear to mention that Citadel does have the order flow information, and actually insinuates the same thing...
Someone educate me but why are hedge funds not limiting the loss by covering the short and closing their short position. Wouldn't that stop pumping from WSB crowd?
The only exceptions I could think of is :
- There isn't enough volume to cover shorts due to incessant buying spree from retail side
- Lending freeze initiated by brokers on client request
My understanding is not enough volume. So many shares are sold short that attempting to buy a significant portion back would drive up prices and initiate the short squeeze (vicious cycle of price going up and shorts forced to buy more shares to cover).
They're too stubborn to take a loss and theres not even enough shares for them to all cover. Its also not really the case that none of them have covered. People close out and then new short sellers come in at the same time taking their place, thinking this is their time and surely it will go down, which keeps the short to available shares high.
The big pumping has only happened over the last few days. Hedge funds are starting to close their short positions (two of the most noted ones Melvin and Citron announced they had just this morning), and many commentators do expect that this will cause the stock to crash soon as people move on.
This has to be a terribly naive question, but where does the information about a fund "short selling" a stock come from?
Is this information just in the wind, because the fund is talking about their trades in an effort to further drive stock down and improve their buy back cost?
Or, are there some kind of disclosures which must be made while they hold this position?
Since short sellers often provide liquidity to the market, if this happens at a large enough scale, it could push hedge fund shorts out of the market and then we could have a return of liquidity problems like during 2008.
Though some of these short operations do target companies with the intention of taking them over at a bargain, it's fair to say that due to the pandemic and the lockdowns that a short on mall related companies is a reasonable move. I guess WSB is ultimately taking advantage of the lack of updating the short position with the emergence of a vaccine.
Wallstreetbets user activity is very similar to the_donald and weekendgunnit. Personally I think hordes of chat bots are instigating this. I fully suspect reddit to come in with a heavy hand and shutdown this game. Next you will see something spin up at either wallstreetbets.win or wsb.win. The party will continue but not nearly as hard as it has been over the past week.
[+] [-] mrh0057|5 years ago|reply
So just sit back and watch for the margin calls to go out and GameStop will skyrocket to something ridiculous while the shorts try to unwind their position. Still don’t get how this mess is going to get cleaned up since it’s impossible for the shorts to cover.
[+] [-] BryanBeshore|5 years ago|reply
[+] [-] jdjfktkrnj|5 years ago|reply
A deep pocketed long term large fund can buy the short position at a discount, a bit like distressed debt, and then just wait it out. It's a guaranteed win if you have deep pockets.
Note that when they buy the position, they don't also inherit the current mark to market loss, only a part of it (the price they pay).
What is a fair price for this position? I would love to know if someone has any insight on this.
[+] [-] SpicyLemonZest|5 years ago|reply
[+] [-] 99_00|5 years ago|reply
As far as I know institutional investors can't short stocks.
[+] [-] voisin|5 years ago|reply
Source? Have you seen an update on breadth of long positions vs short positions?
[+] [-] cpach|5 years ago|reply
[+] [-] mam2|5 years ago|reply
Retail is still not that influent. The fact that hedge fund follow wsb is.
[+] [-] 99_00|5 years ago|reply
Seems like launching a fashion is a significant ability.
[+] [-] ryandward|5 years ago|reply
[+] [-] washedup|5 years ago|reply
[+] [-] koube|5 years ago|reply
[0]: https://marginalrevolution.com/marginalrevolution/2021/01/we...
[1]: https://twitter.com/zerohedge/status/1354412717231251459?s=2...
[+] [-] robjan|5 years ago|reply
[+] [-] drawkbox|5 years ago|reply
[+] [-] hehehaha|5 years ago|reply
[+] [-] lvs|5 years ago|reply
[+] [-] mrRandomGuy|5 years ago|reply
[+] [-] ipnon|5 years ago|reply
[+] [-] satanic_pope|5 years ago|reply
The only exceptions I could think of is :
- There isn't enough volume to cover shorts due to incessant buying spree from retail side
- Lending freeze initiated by brokers on client request
[+] [-] JustFinishedBSG|5 years ago|reply
[+] [-] bo1024|5 years ago|reply
[+] [-] trident5000|5 years ago|reply
[+] [-] SpicyLemonZest|5 years ago|reply
[+] [-] anthonypasq|5 years ago|reply
so WSB keeps buying to screw them for having so little faith :)
[+] [-] xtiansimon|5 years ago|reply
Is this information just in the wind, because the fund is talking about their trades in an effort to further drive stock down and improve their buy back cost?
Or, are there some kind of disclosures which must be made while they hold this position?
What information was WSB community going on?
[+] [-] Threeve303|5 years ago|reply
Though some of these short operations do target companies with the intention of taking them over at a bargain, it's fair to say that due to the pandemic and the lockdowns that a short on mall related companies is a reasonable move. I guess WSB is ultimately taking advantage of the lack of updating the short position with the emergence of a vaccine.
[+] [-] o-__-o|5 years ago|reply
[+] [-] Magodo|5 years ago|reply
What?! I mean sure the culture at both is very meme focused but the similarities pretty much end there
[+] [-] haunter|5 years ago|reply
[+] [-] gradys|5 years ago|reply
[+] [-] BryanBeshore|5 years ago|reply