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High Short Interest Stocks

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Re: High Short Interest Stocks

#191

Post by dan-robertson »

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…

BlackRock own a large position in basically every US equity. The reason is that their funds generally want to be exposed to the entire market or some large subsets of it. They aren’t stating some opinion about the value of GameStop by owning 10% of it as they own about 10% of the entire stock market.

If you see regularly someone’s name on the front page of the New York Times you might infer something about them. If you see someone’s name in the phonebook that is less interesting as (ok, not actually true but hopefully you get the point) everyone is in the phonebook. BlackRock is the phonebook.

Re: High Short Interest Stocks

#192

Post by fock »

bpodgursky wrote: post #36
kortilla wrote: post #27

Earlier quoted context omitted.

“Papa Elon” isn’t exactly praising the working class. WSB has less of a problem with Billionaires than they do Wall Street.

Yeah, WSB hates bankers, has nothing against founder-owners.

that's what puzzles me. All these founder-owners basically took (literal) truckloads of fresh money printed for "keeping the economy running" and swapped it for shares in their extremely overvalued companies. Doesn't sound a lot better than bankers and crucially doesn't work without bankers?

Re: High Short Interest Stocks

#193

Post by dodobirdlord »

bluGill wrote: post #99
epistasis wrote: post #65

Earlier quoted context omitted.

And further, these were large sophisticated investors that should have known when to get out and take their losses (as Melvin eventually did). For us small time folks we can do a limit short so that our risk exposure is limited.

Unless the big guys are convinced that they are right and have the money to not worry about a margin call. In that case they should be shorting more. If GameStop is really worthless then they win when the company finally files bankruptcy.

Not if their short positions expire before the price falls.

Re: High Short Interest Stocks

#194

Post by blackrock »

optimiz3 wrote: post #153
lxbky wrote: post #138

Earlier quoted context omitted.

[deleted]

Long time investor doesn't mean good trader, and shorting is trading. Only fools stay short for a long time. Fees, theta, and margin interest will eat you alive. Plus there's the near infinite downside if you're wrong. Fantastic thread on shorting: https://twitter.com/HedgeDirty/status/1254767346784313344

That was entertaining to read. Thanks for the lolz.

Re: High Short Interest Stocks

#195

Post by KMag »

worker767424 wrote: post #180
KMag wrote: post #177

Earlier quoted context omitted.

An exotic instrument is basically any contract more complicated than a simple put or call option. For a slightly fictionalized version of why these might be useful in the real world, let's say a Finnish life insurer is selling life insurance in Hungary. So, they're doing their accounting (the numerare) in Markka (FIM), taking in payments in Forints (HUF), and exposed to changes in Hungarian mortality rates. So, for t…

So I can like buy an options contract on arbitrary Hungarian deaths?

I should add that I'm pretty sure the actuarial derivatives pay out based on population-level official government statistics. They aren't based on the death rate of the population actually insured by one insurer, and the insurer has to hope that their insured population is similar to the population as a whole, or is at least predictably and consistently offset from the general population so that the hedges are strongly correlated with expenses.

Re: High Short Interest Stocks

#196

Post by blackrock »

On a side note: I finally understood what Buffet and B. Graham meant when they said:

“In the short run, the market is a voting machine but in the long run it is a weighing machine"

It’s such a cryptic phrase, that I never quite understood it for the longest time, until I came to understand the price insanity of TSLA and Bitcoin. And now GME.

My layman’s explanation is:

People get together to buy a stock, because they believe in it, even against all odds. This gives the stock its value to this nebulous group of people. They are the true believers. They are the voters.

Then the stock price runs high, and has a very high market capitalization. Like TSLA, Bitcoin, and now GME. This is the weighing machine part. This means that over time, the company must deliver on its value, in order to justify that its market capitalization is worth its weight in gold.

So, Tesla the company, has been delivering electric cars and new technology, that helps to justify its lofty valuation.

Bitcoin, has brought the Blockchain idea to the masses. Although I’m not quite sure yet how it maintains its weighing part of the valuation. Maybe its Blockchain system becomes the underlying mechanism of other electronic commerce systems.

And GameStop, if they survive this, can cash out at $1000, issue new shares, and take the money to build itself into a giant e-Sports Gaming company. Or maybe it can even build its own GameStation video game system, to justify its lofty market capitalization.

Or something like that. And also, the initial investors are probably just hoping to ride a rocket ship to riches, and then they hold on for the long term.

Re: High Short Interest Stocks

#197

Post by habosa »

Anyone seeing this list as a list of investment opportunities should think twice. This is the list of companies that Big Money is betting heavily against.

In 99% of cases you don't want to take the other side of the bet against these big funds. They could be right and the company is actually a loser, or they could just have way more money than you and the market will never reflect anything but their perspective.

GME is a really fun ride (and I'm rooting for the WSB crowd) but it is a result of a uniquely heavily shorted stock and an even more unique groundswell of popular interest.

Re: High Short Interest Stocks

#198

Post by blackrock »

thrwn_frthr_awy wrote: post #135
dcolkitt wrote: post #108

Fair warning. Buying stocks with high short interest is, over the long run, a terrible investment strategy. Mountains of academic research has consistently found the most heavily shorted stocks to significantly underperform the market[1] (to the order of 10% per year). Heavily shorted stocks tend to be the companies with the most negative cash flow shocks[2], low quality earnings statements[3], negative earnings revi…

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.

Re: High Short Interest Stocks

#199

Post by ThomPete »

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…

and Tesla

Re: High Short Interest Stocks

#200

Post by ThomPete »

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)

margin calls
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