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AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

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Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#131

Post by FabHK »

PragmaticPulp wrote: post #2

I expect a lot of Redditors will be very disappointed when they realize just how much money hedge funds made, on average, out of this episode. The WSB moderators really did everyone a disservice by letting obvious misinformation flood the subreddit. It’s hard to view the later stages of the GameStop phenomenon as anything other than a Reddit-fueled pump and dump scheme.

On the bright side, though, at least it was a zero sum game (well, it will have been by the time the stock is back to where it started). Money was transferred from the early shorts and late longs to the early longs and late shorts; with the market makers taking a bit of a cut.

Many other scams (or, for example, theft and robbery) destroy value (as, for example, a stolen wallet is a much bigger loss to the owner than it is a gain for the thief). Or, say, the 2008 GFC made a few people extremely rich (unscrupulous mortgage peddlers, investment bankers creating "complex, highly leveraged, exotic trades [...] without necessarily understanding all of the implications of those monstrosities", etc.), while wreaking havoc orders of magnitude greater on the entire world.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#132

Post by H8crilA »

Imagine the balls of the person that pitched/approved selling uncovered calls on something that can 2x per day for a few days. "Let's collect $200M in options premium, but if the trend continues we'll lose $1B or even 10x more". Madness. Congrats on the trade tho.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#133

Post by JumpCrisscross »

dcolkitt wrote: post #66
Gunax wrote: post #31

To the surprise of no one--the established, well-prepared and well-funded players out-compete Joe and Jane retailer investor. Everyone loves the David defeating Goliath at his own game narrative. I only worry that we are going to forget all of the times that David gets slain.

There's a simple lesson. Buy and hold a low-fee index fund. Stop trying to pick stocks. And for God's sake stop trying to day trade stocks. Deviating from buy-and-hold indexing is mathematically a zero-sum game. Winning this game is also one of the most monetarily rewarding games on Earth. It's extremely unlikely that you're anywhere near good enough to win this game. If you don't know who the fool at the table is, i…

> There's a simple lesson. Buy and hold a low-fee index fund. Stop trying to pick stocks. And for God's sake stop trying to day trade stocks.

It's a tough lesson to learn. When I realized, I think last Wednesday evening, that intelligent people honestly believed Ken Griffin was ordering Robinhood to block traders from buying GameStop stock so a short of his could make money, I started pricing out puts. (Didn't do anything.)

I burned my hands with thankfully little money in the '08 crisis. It chastened me, and I've been more disciplined since. And I was a professional options market maker. (It's a bit of a running joke: sell-side traders running godawful personal accounts with a handful of hero trades and boatloads of losers.)

I'm not sure I would have been more disciplined had I entered the markets at the tail of a 10-year bull market. Certainly not if the most-accessible trading app encouraged me to day trade. And if my financial identity was largely based on a subreddit that egged me on. It's a difficult problem, and I don't think there are easy answers.

(Counterfactual: individual investing is not hopeless. There is ample evidence that individual investors can and do generate abnormal returns. But it's seldom the people day trading, and when it is, it's not them holding concentrated positions over multiple days.)

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#134

Post by TedDoesntTalk »

WSB_Mod wrote: post #99
PragmaticPulp wrote: post #18

Earlier quoted context omitted.

WSB moderators were (and still are) actively suppressing posts that don’t toe the line. I had a seasoned Reddit account that had been in WSB for a long time. As soon as I started commenting about how the short squeeze wasn’t a sure thing, my posts stopped showing up. They’ve been dismissing any comments that aren’t about GME going to the moon as hedge fund shills or bots. It’s extremely difficult to find any posts or…

> WSB moderators were (and still are) actively suppressing posts that don’t toe the line. We remove far more pro-"meme stock" content than anti-"meme stock". Your anecdote is just that, a single data point. All you need to do is pull the data yourself and you would see that, but instead you are taking personal offence to your content being removed. At this point, almost all content that is removed, is done automatica…

How do you keep a day job and also moderate?

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#135

Post by tmpz22 »

clairity wrote: post #125
dougmwne wrote: post #85

Watching HN get caught up in this Gamestop bubble over the past week has been eye-opening to me about the community. The kind of information being spread around WSB was fully ridiculous. Wild conspiracy theories, financial advice with no basis in reality, astroturfing, and mob behavior. There has been an incredible amount of bleed-over between the garbage I've seen posted on WSB and the things posted in these HN thre…

wait til you really think about the covid bubble for more than 2 minutes. at a population level, you'll see a broad range of misperceptions everywhere. you'll see people missing the forest for the trees (private gatherings vs masks), focusing on trivialities (restaurants, fomites, masks again) and simply ignoring how much low-level emotion (fear, impotence) and instinct (othering strangers) drive our beliefs (have to…

Public health is a drastically different battlefield then public equity. It’s closer to seatbelt laws and geopolitics then it is to day trading. Of course there are going to be different arguments, different misinformation, etc. But you don’t hyper rationalize a public health crisis with arguments like:

“I personally am low risk so...”

“Actually I don’t need to wear a mask when I do this in public because...”

“My political leader disagrees with public health officials so...”

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#136

Post by johntb86 »

mattnewton wrote: post #14

For people not reading the article and thinking this hedge fund was short these stocks: > In December, AMC signed a commitment letter with Mudrick Capital that called for the hedge fund to buy $100 million of new secured bonds that pay 15% cash or 17% deferred interest. In exchange, Mudrick received a commitment fee equal to about 8 million AMC shares. ie, this firm indirectly bet on an AMC recovery, investing in the…

They also sold out-of-the-money calls in Gamestop, meaning they made money if the price didn't increase.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#137

Post by FabHK »

strathmeyer wrote: post #124
PragmaticPulp wrote: post #2

I expect a lot of Redditors will be very disappointed when they realize just how much money hedge funds made, on average, out of this episode. The WSB moderators really did everyone a disservice by letting obvious misinformation flood the subreddit. It’s hard to view the later stages of the GameStop phenomenon as anything other than a Reddit-fueled pump and dump scheme.

Pump and dump? Were they the ones who removed the ability to sell stocks? I guess it's important to spread that misinformation around.

Nobody removed the ability to sell stocks. Some brokers removed the ability to buy stocks (because they were near broke and couldn't afford it), which probably saved some potential buyers some money and brought this train wreck to a halt a bit earlier.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#138

Post by rootusrootus »

PragmaticPulp wrote: post #18
umvi wrote: post #10

Earlier quoted context omitted.

> The WSB moderators really did everyone a disservice by letting obvious misinformation flood the subreddit. Well, on the flip side a lot of redditors learned from the school of hard knocks, which is the best teacher in a lot of ways. Moderators suppressing posts won't teach a lesson you can only learn by losing money.

WSB moderators were (and still are) actively suppressing posts that don’t toe the line. I had a seasoned Reddit account that had been in WSB for a long time. As soon as I started commenting about how the short squeeze wasn’t a sure thing, my posts stopped showing up. They’ve been dismissing any comments that aren’t about GME going to the moon as hedge fund shills or bots. It’s extremely difficult to find any posts or…

> Moderators aren’t just letting Redditors figure it out. They’re shaping the conversation into the illusion of a consensus.

That seems very risky. The mods are certainly identifiable, and the SEC will be investigating.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#139

Post by JumpCrisscross »

dougmwne wrote: post #85

Watching HN get caught up in this Gamestop bubble over the past week has been eye-opening to me about the community. The kind of information being spread around WSB was fully ridiculous. Wild conspiracy theories, financial advice with no basis in reality, astroturfing, and mob behavior. There has been an incredible amount of bleed-over between the garbage I've seen posted on WSB and the things posted in these HN thre…

> HN likes to believe it is evidence based and rational instead of emotional and greedy

To offer a hopeful counterpoint, informed comments and rebuttals were honestly engaged with throughout the fiasco. There was active learning, from somewhat experts seeing cracks that hadn't been so apparent before, to novices seeing the magnificent and horrifying complexity behind our abstractions.

I don't see that on Reddit. I don't see that on Twitter. I barely see it in print media, where the focus is on stoking schadenfreude and counting up who's losing to whom and by how much.

Re: AMC, GameStop Give Hedge Fund Mudrick Capital $200M in Gains

#140

Post by NicoJuicy »

dougmwne wrote: post #85

Watching HN get caught up in this Gamestop bubble over the past week has been eye-opening to me about the community. The kind of information being spread around WSB was fully ridiculous. Wild conspiracy theories, financial advice with no basis in reality, astroturfing, and mob behavior. There has been an incredible amount of bleed-over between the garbage I've seen posted on WSB and the things posted in these HN thre…

Not sure what I'm missing here

I'm currently awaiting 9 February for the shorts interest to be released, to see if they are right or wrong. I think it's really interesting what's happening/happened.

I'm not sure if I see a fallacy, that if you can hold a squeeze that another squeeze could happen if enough shorts stay open. Anyone can elaborate on that?

Taking into account that shorting costs money ( 30% interest at a certain moment, mentioned by S3 partners ), people can hold longer than shorts. And buying them would make the available pool to buy back much smaller.

What is wrong with that theory? It's similar to cornering the market ( if the stocks aren't tradeable again by the brokers) and GME doesn't have that much shares.

Ps. Only put some play money in it, practically nothing. Just curious what the odds are.

And I don't think I'm a meme guy, but to my perception there is logic in it. ( Eg. I'm not buying conspiracy theories about RH, because the flow was logical that they just needed money. ).

For reference, Data from an stock analysis firm https://twitter.com/ihors3?s=09

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