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Hedge fund Melvin sustains 53% loss after Reddit onslaught

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

#381

Post by lultimouomo »

koonsolo wrote: post #341
dcolkitt wrote: post #326

Earlier quoted context omitted.

The correct benchmark for a hedge fund is T-bills, not the S&P or the Nasdaq. That's because hedge funds are an absolute return product that offers an income stream uncorrelated to the market. This may sound counterintuitive, but it's the basis of modern portfolio theory. The price that an investor should be willing to pay for an investment has to do with its beta to the broader market. Think of it this way, imagine…

> Investing 50/50 in S&P and Bizarro-S&P, substantially improves the amount of return you can access for the same risk. I can see how this would lower the volatility of your portfolio. But how do you improve the return in this scenario? > This is the same reason that a 60/40 stock-bond portfolio has massively outperformed 100% stocks historically How is this possible? If I invest 100% in stocks, my return after 10 ye…

When the stock crashes, you can sell some bonds, which have not crashed, and buy stock on the cheap. When the stock recovers, you sell some stock and buy bonds. Rinse and repeat.

(You don't need to try and time the market for this to work. You can have a threshold so that you rebalance when you deviate from your target allocation more than X%)

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

#382

Post by ajross »

elif wrote: post #378
ajross wrote: post #375

Earlier quoted context omitted.

I still don't see what this has to do with the point above, which is that a promoted tweet from CNBC for one of their segments is clearly not a paid advertisement by the guest in the segment.

You don't think it is relevant in a discussion about deceptive paid primetime television marketing, that the company in question has the highest documented rate of deceptive paid primetime marketing?

OK, you're just misunderstanding. "Primetime Television" is a marketing term that refers to the traditional TV network programming scheduled between 8-10pm. This is where they put the sitcoms and dramas and reality shows. And "Product Placement" refers not to advertising per se, but paid placement of retail products (e.g. cars, sodas, whatever) into the scenes in the fiction, or to appear as prizes, etc...

It doesn't refer to news programming or other journalism, you just got confused. And I'll say it again: if NBC News, or any other major news media organization, ever got caught teasing a segment because of third party payment, it would be a much, much (seriously: much) bigger story than this minor nonsense about GameStop. They simply do not do what you are alleging, period.

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

#383

Post by Ballu »

bugzz wrote: post #238
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.

2-3 weeks ago when share prices were around $17, GME had a market cap of less than 1.2B. WSB has 7.6 million users now, but I assume it went up a lot recently. Say 2 million of them bought some GME. To buy 50% of the shares a couple weeks ago it would have only taken $296 each. So they could ABSOLUTELY get prices moving significantly. Now of course lots more people have jumped on now. But that 20B volume number is af…

Best number should be Robin Hood consumer. I read somewhere that 56% of RH subscribers were owning GME. I dont do stock trade, not sure whether this means every one has atleast one or the company let you group the $$ amounts too.

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

#384

Post by sschueller »

ajross wrote: post #382
elif wrote: post #378

Earlier quoted context omitted.

You don't think it is relevant in a discussion about deceptive paid primetime television marketing, that the company in question has the highest documented rate of deceptive paid primetime marketing?

OK, you're just misunderstanding. "Primetime Television" is a marketing term that refers to the traditional TV network programming scheduled between 8-10pm. This is where they put the sitcoms and dramas and reality shows. And "Product Placement" refers not to advertising per se, but paid placement of retail products (e.g. cars, sodas, whatever) into the scenes in the fiction, or to appear as prizes, etc... It doesn't…

Does a free ticket to the exclusive event count as payment? You know like an apple event where new products are presented and then published in every paper around the world.

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

#385

Post by alasdair_ »

flunhat wrote: post #331
alasdair_ wrote: post #323

Earlier quoted context omitted.

>If you're a fund manager who lies to the public about closing a highly volatile position that could bankrupt you, you are facing securities fraud and violation of fiduciary duty, respectively. The claim that Melvin closed their position is something of a game of "telephone" in that it was a CNBC anchor that claimed that "from what I understand" Melvin Capital is out of the stock, after he talked to the CEO (off came…

You are purposefully misquoting Andrew Ross Sorkin. The "from what I understand" refers to the time Melvin Capital closed their position, not the overall fact that their short interest is closed. The full quote from Sorkin's segment, ~40 seconds into the video: "Melvin Capital is now out of the stock. They got out of the stock, from what I understand, yesterday afternoon." ( https://twitter.com/cnbc/status/1354406938…

>That's not a game of telephone, that's quoting a direct source

No, it's not. Not at all.

A quote is where the actual words someone said are put forth verbatim. What we got was a summary of what was said and that's exactly my issue with the statement - summaries leave wiggle room for people to come back later and say "well, that's not exactly what I said".

>Every single article published in any newspaper ever is a journalist claiming a source said something.

Yes, and there are conventions to make it clear when the journalist is directly quoting a source (the use of quotation marks) and when the journalist is giving their own summary of what the source said.

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

#386

Post by intrasight »

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.

Not just crude humor but bespoke financial vocabulary. Listen to the interview with Lily Francus on Real Vision podcast on Friday. The industry analysts are having to learn some new terminology. "When we listen to her conversation about this,the words that she uses, between the three of us we have 50+ years of experience watching markets. And she uses phrases that we don't generally use: 'the storybook', 'the epicenter of the god meme', 'the blast radius'. This is a shift in the way the narrative is getting spun"

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

#387

Post by intrasight »

gonzo41 wrote: post #180
Moodles wrote: post #16

Earlier quoted context omitted.

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.

I know it's not illegal, but how is being that big and lying, not market manipulation?

What is market manipulation? Apparently, anything not covered by the VAR models of the big banks.

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

#388

Post by koonsolo »

lultimouomo wrote: post #381
koonsolo wrote: post #341

Earlier quoted context omitted.

> Investing 50/50 in S&P and Bizarro-S&P, substantially improves the amount of return you can access for the same risk. I can see how this would lower the volatility of your portfolio. But how do you improve the return in this scenario? > This is the same reason that a 60/40 stock-bond portfolio has massively outperformed 100% stocks historically How is this possible? If I invest 100% in stocks, my return after 10 ye…

When the stock crashes, you can sell some bonds, which have not crashed, and buy stock on the cheap. When the stock recovers, you sell some stock and buy bonds. Rinse and repeat. (You don't need to try and time the market for this to work. You can have a threshold so that you rebalance when you deviate from your target allocation more than X%)

I don't see how this would outperform 100% stocks over 10 years.

Or in other words, show me the numbers.

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

#389

Post by rantwasp »

keeganpoppen wrote: post #334
sroussey wrote: post #219

Earlier quoted context omitted.

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.

that's what i've been thinking about too-- at what point is it economically expedient for GameStop to sell shares directly to the shorts to bail them out? doesn't seem much weirder than all the credit default swap silliness that's happened for the past few years.

they cannot just make whatever stocks they want up. they are limited there on the number they can emit. plus, not sure if they get to choose who gets to buy the shares.

also, why would gamestop bail out the same people that wanted to drive it into the ground?

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

#390

Post by rantwasp »

mathattack wrote: post #292
rantwasp wrote: post #98

Earlier quoted context omitted.

you believe markets are rational. they are not. if the hedge funds that messed up unload shares of other companies they own to eventually cover, this could easily escalate via a positive feedback loop collapsing the whole market (the fact that we’re in a market that ignores fundamentals is also not helping). so the fed just just force the hedge funds to cover in a controller way (ie you’re no longer allowed to short,…

Not arguing rationality. Just arguing that it’s too small for the Fed to care. 14 billion on one stock doesn’t tank the market. Tesla or Apple can move the market that much on one earnings announcement.

it’s not this one stock. it’s the volatility and the unintended consequences these can trigger
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