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High Short Interest Stocks

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Re: High Short Interest Stocks

#211

Post by pjc50 »

cbozeman wrote: post #164
PragmaticPulp wrote: post #159

Earlier quoted context omitted.

These situations tend to blow Up both sides, more or less. A few lucky Redditors will get out with profits. Most of the late entries are going to take steep losses. Those losing Redditors will be paying the winning Redditors. The narrative that this is hedge funds losing to Redditors isn’t fully accurate.

Hedge funds are down $70 billion over this, so I'm pretty sure there's some accuracy. And no, its not all GameStop, but $GME is a driver. https://www.reuters.com/article/us-retail-trading-shortbets-...

This is very much reminding me of 2008. If you keep blowing up financial institutions, eventually you're going to hit a Lehman and the counterparty risk spreads to the rest of the system.

Re: High Short Interest Stocks

#212

Post by nervousvarun »

blackrock wrote: post #198
thrwn_frthr_awy wrote: post #135

Earlier quoted context omitted.

It turns out an online community can stay irrational longer than a hedge can solvent.

Good one. They also call themselves Autists and Retards. I read a suggestion that it’s not the price of the stock that scared the hedge fund. But the borrowing costs, where the interest rates might have gone as high as 80%! That’s quite an expensive credit card there to be shorting stocks with.

This is why r/wallstreetbets uses "hold" as a rallying cry. The interest continues to accrue with each day they hold out.

An obviously that's only to a point. If you get into this late you are definitely more likely to get burned. But it's clear some of these people genuinely seem to care about "wrecking hedge funds" as much as anything else.

Re: High Short Interest Stocks

#213

Post by pjc50 »

andi999 wrote: post #176
thrwn_frthr_awy wrote: post #135

Earlier quoted context omitted.

It turns out an online community can stay irrational longer than a hedge can solvent.

So currently some hedge Fonds are bleeding money, true? So who is the counter party who currently gets this money (can't be the community since they hold)

Whoever has been selling into the funds which needed to cover shorts has been doing very well. As have those who were lending out the shares for the shorting.

Probably some of the early WSB pumpers have quietly sold while yelling at the community to hold, too.

However, we should always be careful with unrealized gains and losses. Those aren't confirmed until people exit their positions.

Re: High Short Interest Stocks

#214

Post by joncrane »

ngngngng wrote: post #147
dcolkitt wrote: post #142

Earlier quoted context omitted.

I'm old enough to remember people saying the exact same thing in 1999. The four most dangerous words in investing are: "This time is different"

I'm fairly confident it's going to be a while before a stock is shorted over 100% again, barring some big regulatory overreach. As soon as it happens, we'll meme it again.

Are you sure? Won't markets get more efficient and the squeeze start earlier (before it gets to 100% short interest)? Surely there will be more caution on the shorters' side (and perhaps earlier exits) and faster uptake on the squeezers' side? I think this GME thing is not only unprecedented, there won't be followed by anything similar (for maybe 100 years...the Piggly Wiggly short squeeze happened almost exactly 100 years ago...)

Piggly Wiggly short squeeze story: https://twitter.com/dollarsanddata/status/135456144478064640...

Re: High Short Interest Stocks

#215

Post by kzrdude »

cbozeman wrote: post #162
thrwn_frthr_awy wrote: post #135

Earlier quoted context omitted.

It turns out an online community can stay irrational longer than a hedge can solvent.

This was one scenario were the shorts really did have it wrong. GameStop's financials were and are pretty solid. There was no reason to short the stock so heavily, which is why they're in the trouble that they're in right now. You should watch Roaring Kitty's video from June 2019 I believe (maybe its 2020?) on YouTube about this. He goes into great detail, with something like an hour of analysis on why $GME is a reas…

> You should watch Roaring Kitty's video

It's from 2020. I just want to add that he's humble about his analysis too. He explains his case in a lot of great detail and still writes "bullish on gamestop, perhaps foolishly so".

Re: High Short Interest Stocks

#216

Post by deathgrips »

PragmaticPulp wrote: post #159
thrwn_frthr_awy wrote: post #135

Earlier quoted context omitted.

It turns out an online community can stay irrational longer than a hedge can solvent.

These situations tend to blow Up both sides, more or less. A few lucky Redditors will get out with profits. Most of the late entries are going to take steep losses. Those losing Redditors will be paying the winning Redditors. The narrative that this is hedge funds losing to Redditors isn’t fully accurate.

You're assuming that people on r/wallstreetbets are exactly the same as people on wall street who literally only care about money. The redditors buying don't want to make money, they just want to kill the hedge fund. By wasting a few hundred dollars they are making a larger dent in wall street than congress has made for the last few decades.

Re: High Short Interest Stocks

#217

Post by xxs »

MattGaiser wrote: post #143
dclowd9901 wrote: post #124

Earlier quoted context omitted.

Is it not also possible that the shorting itself influences the direction of the stock/performance of the company? I'm not sure you can make a statement like you're making. There, to me, is not a direct cause/effect relationship here.

It influences the direction of the stock price perhaps, but why the fundamentals?

The easiest part - cut workforce to improve bottom line (and share prices, as management gets their own stock options), kill R&D.

Engineers* quit as part of their remuneration packages are stock options.

Overall perception and morale, hard to acquire new talents, etc.

Re: High Short Interest Stocks

#218

Post by PartiallyTyped »

kgwgk wrote: post #210
PartiallyTyped wrote: post #206

Earlier quoted context omitted.

'Fundamentals' and all that is a bs excuse used to scapegoat driving stocks they or their friends don't like to the ground. Let me ask this. How in the world can an 'analyst' know more about tech than the people that work all their lives in bleeding edge research and technology? They don't. They don't know more than Jim Keller whose primary task was development of Zen architecture at AMD - which traded at $5 before h…

“Our goal is, and I feel pretty good about this goal, that we’ll be able to do a demonstration drive of full autonomy all the way from LA to New York, from home in LA to let’s say dropping you off in Time Square in New York, and then having the car go park itself, by the end of next year,” [Musk] said on a press call [in October 2016]. “Without the need for a single touch, including the charger.” How much did you nee…

Consider the following, everyone claimed reusing rockets was physically impossible. Well here we are now.

Sure 'end of next year' may be impossible, but doing it at some point is not necessarily impossible given certain conditions.

Nothing to do with targets, everything to do with values. And a company is more than what it produces, it is also the patents they own and the brains they wield.

PS: I do research in ML.

Re: High Short Interest Stocks

#219

Post by xxs »

totalZero wrote: post #157
dcolkitt wrote: post #141

Earlier quoted context omitted.

How would short selling cause a company's next quarterly earnings to be disappointing?

I sometimes wonder how much the share price affects management's opinion of its own performance. If valuation is viewed as a report card of sorts, then management is likely to seek financing and damage control when shares are cheap. Doubt of that nature could have a negative effect on their ability to perform. Not to mention that share price likely plays a role in their personal wealth.

Stock price affects regular engineers/developers, if they have stock options for example.

Re: High Short Interest Stocks

#220

Post by andi999 »

robinei wrote: post #209
andi999 wrote: post #187

Earlier quoted context omitted.

That would be virtual bleeding (which could be the case though), but if you bleed real money then somebody else has to receive it. If you hold a stock money doesn't come to you (except as annual profit distribution but that is a different issue). I read the fees for borrowing a stock for shorting are coupled to the market price (not sure). So if you fund lost a few billion real money (so they have to sell other asset…

The stocks they are borrowing for their shorts have really high interest now. They are bleeding money just paying interest. And now that goes for a couple of hundred percent of the stock float.

Who specifically get this interest now? Maybe it is not know, but maybe somebody knows here?
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