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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

#201

Post by BoorishBears »

robbomacrae wrote: post #91
kyrieeschaton wrote: post #29

How much evidence is there that the "reddit onslaught" actually moved the price, as opposed to them being the stalking horse for more sophisticated actors with more capital exercising a vanilla short squeeze strategy?

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…

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

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

#202

Post by emanuelsaringan »

dcolkitt wrote: post #185
Mo3 wrote: post #155

Earlier quoted context omitted.

No, it's not. According to S3 data they've not. They're running a massive smear compaign to convince the public otherwise.

Incorrect. S3 only shows aggregate short interest. That data does not in anyway indicate Melvin's specific position. Almost certainly what happened is that while Melvin was unwinding other hedge funds were opening up new short positions at the current extremely dislocated prices. And this is exactly why WSB's short squeeze theory is doomed to failure. It's not like once you beat Melvin that all of Wall Street just de…

This is just circular reasoning. More shorting -> fuels retail traders buying -> leads to more shorting -> leads to more buying.

This can go on until GME becomes part of S&P 500. At this point WSB doesn't even need to do anything because pension funds, and other institutional investors etc. will end up buying GME.

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

#203

Post by dragonwriter »

Uehreka wrote: post #195
addandsubtract wrote: post #172

Earlier quoted context omitted.

Aren't 140% of 10 million shares 14 million?

So, my layman’s understanding is that if there are 10 million shares, and you borrow 1 million of them (a 10% short position) from their owners, then sell them to new owners, both the old owners and new owners count as owning stock, and so 11 million shares “are owned”. My understanding is that then when the end of the quarter comes around, the owners of all 11 million shares are owed dividends. 10 million of those r…

> So, my layman’s understanding is that if there are 10 million shares, and you borrow 1 million of them (a 10% short position) from their owners, then sell them to new owners, both the old owners and new owners count as owning stock, and so 11 million shares “are owned”

The old owners don't strictly own stock, they own a future claim due on a certain date against you for the borrowed quantity of stock plus a claim against you for the equivalent cash value of any dividends issued against the number of shares of stock borrowed in the interim.

It's mostly equivalent to owning stock, but not exactly the same.

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

#204

Post by motohagiography »

tpmx wrote: post #81
motohagiography wrote: post #58

%53, so far. The problem with the short interest being %140 is that the notional value of shares to cover that extra %40 is in fact, infinite. It's literally everything those funds can sell, borrow, and get bailed out to cover their position. My prediction last week was this has system wide implications, and I'm thinking 1. the Fed will intervene, leverage Robinhood's EULA, and buy out everyone's shares at a price th…

> %53 What's with that weird way of writing a percentage numeric? Some weird "i'm an insider, trust me" signalling?

If you must know, I now use them interchangeably because on my android keyboard the % symbol is two meta options deep, so i am now in the habit of using it first because I don't want to risk typing additional characters triggering the auto-correct.

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

#205

Post by bigpumpkin »

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).

Exited its bet doesn't preclude it from re-entering into a similar one a day later

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

#206

Post by fractionalhare »

easton wrote: post #184
ajross wrote: post #24

Earlier quoted context omitted.

> 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.

This is not what happened, I don't know why people keep perpetuating it. The entire source of the "Melvin Capital has closed their positions" thing is an anchor on Squawk Box on Wednesday morning saying that he just got a call from Melvin's fund manager who said that Melvin closed. There hasn't been any other comment besides that one, which is why people think it may have been less than honest. https://www.cnbc.com/2…

The more compelling reason to believe they didn't lie about it is because we haven't heard they went bankrupt yet. We probably would have heard that it happened by now, and they certainly would have been bankrupt if they didn't get out of GME in the $100s.

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

#207

Post by jerry1979 »

easton wrote: post #184
ajross wrote: post #24

Earlier quoted context omitted.

> 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.

This is not what happened, I don't know why people keep perpetuating it. The entire source of the "Melvin Capital has closed their positions" thing is an anchor on Squawk Box on Wednesday morning saying that he just got a call from Melvin's fund manager who said that Melvin closed. There hasn't been any other comment besides that one, which is why people think it may have been less than honest. https://www.cnbc.com/2…

Also, it seems like "close my position" could mean anything. Does that phrase have any specific legal meaning? For example, if I own 1 share of GME, then that is my "position". If I buy another share of GME, then I have a new position: 2 shares of GME. I "closed" my first position, and opened a new one.

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

#208

Post by gruez »

briefcomment wrote: post #170
gruez wrote: post #152

Earlier quoted context omitted.

...and here's a financial columnist (ie. an expert) writing about it: https://www.bloomberg.com/opinion/articles/2021-01-29/reddit... >Market makers stand ready to buy or sell stock from or to customers; they try to buy for a bit less than they sell at, and pocket the spread. If you go out into the market and say “hey I’ll buy anyone’s stock for $10,” and a really smart hedge fund comes to you and sells you stock for…

That's fine if market makers stick to the rules. What do you make of some of what Citadel has done before? https://www.bloomberg.com/news/articles/2020-07-21/citadel-s... https://www.sec.gov/news/pressrelease/2017-11.html

There were no allegations that they provided a worse price than the NBBO (ie. the price you'd get if there wasn't PFOF), just that out of all the firms offering PFOF, robinhood didn't choose the best one for their customers.

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

#209

Post by sroussey »

BoorishBears wrote: post #201
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…

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.

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

#210

Post by freeflight »

mmahemoff wrote: post #92
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.…

They latched onto Citron first. They're focusing on punishing the "enemy" instead of an abstract trade idea. Motivates holding longer instead of jumping ship to cash out. At this point though, many original buyers have probably sold some/all and most current holders are in it to make a quick buck, not to stick it to the suits. They'll be happy to jump off with a 2x or 3x return if they think the house of cards is abo…

> They're focusing on punishing the "enemy" instead of an abstract trade idea.

Afaik that's only a somewhat recent change in narrative.

One doesn't get that many people, and that much money, on-board solely on the idea of "Burn your money to punish an enemy that has much more money than you", you get them on-board by promising massive gains and how getting in on this will yield such great returns that people can buy houses and pay off debt.

Which was the original narrative that started all of this and is still the most peddled one.

There are a handful of people who are quite open about the fact that they are willing to burn money to hurt the hedge-funds, but those get mostly drowned out by the flood of comments along the lines of "Look at all the money we made!" pushing people to further buy in even when GME is at $200+ because "We go to the moon!" or some other memefied slogan.

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