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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

#211

Post by drcross »

qeternity wrote: post #173
bluGill wrote: post #103

Earlier quoted context omitted.

Because closing their position is not what any sane shorter wants to do. The bottom line of GameStop sucks baddly. Anyone who can add to their shorts stands to make a fortune in a few months after this all calms down. Though they might have seen what was happening and exited at 50 to reenter at 300. That would be incredible foresight.

Why do you think short squeezes happen? It’s not because shorts are being insane and covering. They are literally forced to. You have buying for reasons that aren’t commercial and that’s why short squeezes are so bloody.

These are naked shorts, more shares are shorted in GME than exist in the company.

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

#212

Post by malandrew »

gnarbarian wrote: post #122
dataflow wrote: post #101

Earlier quoted context omitted.

I wouldn't call it a conspiracy theory or call this out as an example of Occam's razor. > Collectively they can, and did, cause this.. no need to invent other actors to explain it. The thing is, people imagine this requires a lot of capital to pull off. How did WSB get so many people to invest so much into GME as to hit a hedge fund so hard? Do so many people really have that much money just to throw away? There is a…

A lot of us have a few thousand to yolo. I made money on it too. I'd say most of us were in it for the lulz. who cares if we lose.

This. A lot of my immediate co-workers have YOLO-ed on this because it's entertaining and we like the stock.

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

#213

Post by takklz »

fairity wrote: post #163
newacct583 wrote: post #14

Earlier quoted context omitted.

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.

You can avoid the borrowing fee and margin call risk by purchasing PUT options. The $320 PUT expiring in 1 year costs $240. I purchased 2 contracts on Wednesday bc I don't see a scenario where the price doesn't crash back down below $60 within a year. Expected ROI of 10-20%. Not a large return, but also a pretty safe bet imo considering their ATH prior to this squeeze was $60, and that was back in 2007.

The put options im seeing for 1 year out at $320 currently cost $24,000. (1 contract at 100 shares) what are you looking at that I am not? Am I looking at the wrong thing?

Edit: (sorry I’m not an expert in options)

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

#214

Post by ogre_codes »

Most stunning thing in this article to me:

"The GameStop saga marks a fall from grace for Melvin, which gained 52 percent last year, ranking it among the best performing hedge funds."

This is kind of surprising. I personally know a few retail investors who crushed that number. Not with fancy day trading, just owning a few good companies.

I know it's a lot harder for institutions to get outsized returns, I just didn't expect the best hedge funds didn't do better in what turned out to be a softball market for investors.

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

#215

Post by bluedevil2k »

friedman23 wrote: post #182
dataflow wrote: post #139

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. Is this true? Louis Rossmann pointed out they would have a huge incentive to lie about this (to prompt people to sell and drive prices down).

It would be illegal for them to lie about it.

The fine would be cheaper than their continued losses.

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

#216

Post by malandrew »

nl wrote: post #171
nprz wrote: post #114

Earlier quoted context omitted.

I mean the WSB user count has grown from 2.2m on Monday to now 7.5m. If 5 million of those users all bought $100 worth of GME that's half a billion, if they bought $1000, that's 5 billion.

> the WSB user count has grown from 2.2m on Monday to now 7.5m. If 5 million of those users all... Is 5/7.5M users of any forum did anything it would be some kind of record level conversion, let alone speculating $100.

On average I don't think $100 is that crazy. Most haven't YOLO-ed anything. While many YOLO-ed for 1-2 shares, there are many who have YOLO-ed for thousands to tens of thousands of dollars.

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

#217

Post by drcross »

fractionalhare wrote: post #64
drcross wrote: post #50

Earlier quoted context omitted.

I'll double down for you and it will really melt you brain- they paid Ars in this article to say they have covered their shorts. To think hedge funds wouldnt do such a thing when so much is riding on this, is extremely naive.

With respect, you haven't thought this through. Given there is "so much riding on this", why do you think a hedge fund would concoct a nefarious, extremely uncertain scheme to get people to think they closed instead of actually closing? You agree they're motivated by money, right? They would have lost literally all their money, even with the additional investment, if they were still in when GME soared to $400. They w…

>why do you think a hedge fund would concoct a nefarious, extremely uncertain scheme to get people to think they closed instead of actually closing?

Because they haven't closed their positions, and that information would tip shareholders into thinking they might release some profit before the price levels out.

>They would have lost literally all their money, even with the additional investment, if they were still in when GME soared to $400

No. Not if their positions haven't closed.

If you really think this through, why would they actually announce they have covered the shorts instead of simply reclaiming a short position?

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

#218

Post by qeternity »

samename wrote: post #199
nickysielicki wrote: post #32

Earlier quoted context omitted.

The way that WSB has latched onto Melvin as their enemy is to their detriment. It was never about killing Melvin capital, or at least, it shouldn't have been. It ought to have been about the ridiculous short interest on the stock, regardless of who was funding it. Whether or not Melvin specifically has covered their shorts is irrelevant to how the short interest as a percentage of float has changed in the past week.…

How could they have covered their shorts on Friday with such low volume?

Huge volumes trade off exchange in “upstairs” markets (blocks and dark pools). In a super volatile and absurdly illiquid at times market like GME recently, this is where the institutionals would do most of their trading.

If I needed to buy 1m shares of GME I wouldn’t do it in the open market. I would call my favorite sell side shop, let’s say Goldman and have them call Fidelity or similar to arrange a block trade.

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

#219

Post by sroussey »

rantwasp wrote: post #104
robbomacrae wrote: post #91

Earlier quoted context omitted.

So many conspiracy theories on both sides these days. Don't forget Ocram's razor. I don't think there are many sophisticated actors here at all. I'm speaking as one who did DD on GME back in September and throw some money in (thought it was a great opportunity mainly because of Cohen + the upcoming console super cycle with a tiny chance of squeeze thrown in) It was a smart discovery by WSB and got a bit more than ave…

this is a classic example of a positive feedback loop. wsb did not do all of this but they were the spark that created the fire.

Feedback loop for sure. A movie will be made on this. YOLO!

I can see GameStop putting an end to some of this by issuing non-voting shares to one of the hedge funds that is current shorting, giving them a known out and pocketing a huge investment for M&A.

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

#220

Post by BoorishBears »

sroussey wrote: post #209
BoorishBears wrote: post #201

Earlier quoted context omitted.

20B in volume in a single trading day and people still think this is just retail. Sheesh.

It’s the retail volume that is breaking things, but yeah other are riding momentum.

Exactly as I said... this is not just retail. Not 20B in a single trading day.
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