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Hedge fund Melvin sustains 53% loss after Reddit onslaught

arstechnica.com

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Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#21

Post by MichaelApproved »

newacct583 wrote: post #14
wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The stock is currently around $300, up by a factor of five from last week and much more than that over its historical base. The question should be who isn't shorting GME, not leading questions about a conspiracy theory as to whether or not Melvin actually closed its shorts or not. I mean, I haven't shorted GME personally. But I've absolutely joked with friends that it's an obvious play. Maybe I should.

If you can find shares to borrow, are willing to pay the 30% fee, and can handle the swings of a spike higher, go for it.

What will last longer, your solvency or the market’s irrationality?

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#22

Post by joekrill »

MichaelApproved wrote: post #12
Moodles wrote: post #9

Earlier quoted context omitted.

A better question is: If Melvin made a huge short position and is now finally out of it, why would they bother telling everyone? ;-)

So investors in Melvin won’t abandon them. They want to reassure their own investors that the damage is done and they’re out.

In that case they could most definitely inform their investors directly and there's absolutely no need to make a public statement about it.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#23

Post by [deleted] »

viraptor wrote: post #19
PurpleFoxy wrote: post #8

The best part about this whole situation is news companies having to translate crude reddit humour and logic in to something old people can understand. Seeing them trying to explain why billions of dollars move because of people who refer to themselves as retards who want to earn money to buy chicken tenders.

Does the Reddit part matter? It seems to be meta humour around completely risky but reasonable behaviour. You can explain pretty much everything about it in standard market terms. Mentioning the memes and crude humour is just getting into drama. (And completely optional)

[deleted]

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#24

Post by ajross »

Judgmentality wrote: post #11
wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The general assumption on WSB is that Melvin Capital is lying and that they haven't closed their positions. I haven't seen any evidence to suggest they've closed it, and have seen circumstantial evidence suggesting they have not. You don't spend money on ads saying "we no longer have a financial stake in this stock" unless you, you know, have a financial stake in this stock. Considering this is a hedge fund, I just a…

> You don't spend money on ads saying "we no longer have a financial stake in this stock"

I don't think they did. The source of this meme seems to be a Twitter ad from CNBC that was teasing an interview with a quote to that effect. That's a CNBC ad selling their show, they don't take paid ads from their guests.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#25

Post by Tenoke »

newacct583 wrote: post #14
wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The stock is currently around $300, up by a factor of five from last week and much more than that over its historical base. The question should be who isn't shorting GME, not leading questions about a conspiracy theory as to whether or not Melvin actually closed its shorts or not. I mean, I haven't shorted GME personally. But I've absolutely joked with friends that it's an obvious play. Maybe I should.

Shorts aren't free. Even if you know a stock will eventually drop, benefiting from that is not quite so simple.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#26

Post by PurpleFoxy »

viraptor wrote: post #19
PurpleFoxy wrote: post #8

The best part about this whole situation is news companies having to translate crude reddit humour and logic in to something old people can understand. Seeing them trying to explain why billions of dollars move because of people who refer to themselves as retards who want to earn money to buy chicken tenders.

Does the Reddit part matter? It seems to be meta humour around completely risky but reasonable behaviour. You can explain pretty much everything about it in standard market terms. Mentioning the memes and crude humour is just getting into drama. (And completely optional)

It is somewhat important to describe how these people are not acting rationally or individually and how these internet groups can group together to have very powerful and unusual effects.

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#27

Post by sharkweek »

PurpleFoxy wrote: post #8

The best part about this whole situation is news companies having to translate crude reddit humour and logic in to something old people can understand. Seeing them trying to explain why billions of dollars move because of people who refer to themselves as retards who want to earn money to buy chicken tenders.

My favorite part is imagining the editorial debate that occurs at more traditional news media as to whether or not to cite a quote from someone with the user name /u/pm-me-videos-of-u-farting or /u/lickmydogsbutt

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#28

Post by [deleted] »

Moodles wrote: post #16
saurik wrote: post #13

Earlier quoted context omitted.

Maybe so investors can evaluate the current status of their hedge fund without thinking there is some massive looming instability about to hit them?

Or, maybe they're lying to discourage more calls? In any case, their best strategy is to claim they're out of the short position so really them saying so is useless information.

[deleted]

Re: Hedge fund Melvin sustains 53% loss after Reddit onslaught

#30

Post by cblconfederate »

PurpleFoxy wrote: post #8

The best part about this whole situation is news companies having to translate crude reddit humour and logic in to something old people can understand. Seeing them trying to explain why billions of dollars move because of people who refer to themselves as retards who want to earn money to buy chicken tenders.

For a day, wsb had replaced their header image with a giant penis cartoon. No wonder they couldn't show screenshots that day
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