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High Short Interest Stocks

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Re: High Short Interest Stocks

#251

Post by NoOneNew »

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…

Yea, but you know what a lot of these studies fail to grasp that the WSB exposed? The human factor. Namely, predatory humans.

Yes, a lot of the companies who get heavily shorted stumbled. But then, to guarantee a profit, the shorting hedge funds knee cap the company. Then they short them again and again. The current fiasco also shows the widespread influence these firms have to enact their will on the market.

If you look at the stock market as independent number generator, you'll always use statistics to explain what's going on. If you realize there are humans behind those numbers, you see it more like a crime scene rather than a math problem.

Re: High Short Interest Stocks

#252

Post by PartiallyTyped »

soVeryTired wrote: post #224
PartiallyTyped wrote: post #206

Earlier quoted context omitted.

'Fundamentals' and all that is a bs excuse used to scapegoat driving stocks they or their friends don't like to the ground. Let me ask this. How in the world can an 'analyst' know more about tech than the people that work all their lives in bleeding edge research and technology? They don't. They don't know more than Jim Keller whose primary task was development of Zen architecture at AMD - which traded at $5 before h…

Those analysts are incredibly specialised. The rank and file developer ‘at the bleeding edge’ spends their day buried deep in a single codebase. The analyst spends their day carefully picking through industry trends. You say short sellers are using fundamentals as an ‘excuse’ to short stocks ‘they don’t like’. If not from careful analysis of the business, where should the opinions come from?

How about potential and understanding of underlying tech? Nvidia was an obvious play in 2013 with the precursor of AlexNet, AMD was an obvious play when Jim Keller was done.

Re: High Short Interest Stocks

#253

Post by andi999 »

IG_Semmelweiss wrote: post #236
andi999 wrote: post #187

Earlier quoted context omitted.

That would be virtual bleeding (which could be the case though), but if you bleed real money then somebody else has to receive it. If you hold a stock money doesn't come to you (except as annual profit distribution but that is a different issue). I read the fees for borrowing a stock for shorting are coupled to the market price (not sure). So if you fund lost a few billion real money (so they have to sell other asset…

Correct. Unsung winners are counterparties to hedgefunds in trouble The troubled melvins and maples are exiting succesful positions to be liquid and cover for the black hole that is GME.

So that's basically wall street winning again (different house number though..)

Re: High Short Interest Stocks

#254

Post by PragmaticPulp »

cbozeman wrote: post #164
PragmaticPulp wrote: post #159

Earlier quoted context omitted.

These situations tend to blow Up both sides, more or less. A few lucky Redditors will get out with profits. Most of the late entries are going to take steep losses. Those losing Redditors will be paying the winning Redditors. The narrative that this is hedge funds losing to Redditors isn’t fully accurate.

Hedge funds are down $70 billion over this, so I'm pretty sure there's some accuracy. And no, its not all GameStop, but $GME is a driver. https://www.reuters.com/article/us-retail-trading-shortbets-...

If you only add up the estimated short positions, and you assume they didn't hold any winning long positions, and you assume short positions are only held by hedge funds, and you assume the hedge funds didn't hedge with other contracts, that estimate might come close.

That's a lot of assumptions, though.

Some hedge funds are going to make bank on this.

Re: High Short Interest Stocks

#255

Post by brummm »

cvhashim wrote: post #22
garmaine wrote: post #15

Earlier quoted context omitted.

...it has though? This isn’t a new thing. Happened with VW in 2008, for example.

This is definitely bigger than 12 years ago considering the proliferation of phones and easy access to the markets with apps.

With respect to what metric? I am pretty sure that the VW was way bigger with regards to market cap and corrected for inflation, etc.

Re: High Short Interest Stocks

#256

Post by NamTaf »

ballenf wrote: post #244
cbozeman wrote: post #162

Earlier quoted context omitted.

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…

> GameStop's financials were and are pretty solid. But aren't stock prices almost entirely about future performance? So will GME's business model work tomorrow? I think the answer is yes. They're the best option for buying used peripherals that I've found. I can get it right away, can exchange easily if a problem and can see the item before I buy (or at least when I pickup). I've just wasted too much time trying to s…

> But aren't stock prices almost entirely about future performance? So will GME's business model work tomorrow?

Yes, and that's sort of Roaring Kitty's point in that video. He interpreted the negativity about it as being way too extreme for the financials of the company. It was basically saying the company was going to fail tomorrow, whereas his analysis said to him that it still had several reasonable years ahead of it which the share price didn't reflect.

Re: High Short Interest Stocks

#257

Post by mike00632 »

myownpetard wrote: post #160
mike00632 wrote: post #133

Earlier quoted context omitted.

The thought of GameStop stock going up to infinity (and never coming down) doesn't seem rational.

It doesn't need to go to infinity. GameStop just needs to get to parity with totality of the collective assets of every short seller. Then to make good on their debt, those entities will be fully liquidated. They took on unbounded risk and have no leverage if all of the stockholders refuse to sell for anything less. The stock is less a company than a contract that can be purchased that says the other party has to pay…

There is a lot of assumptions there. You're assuming the short sellers must cover their shorts at the highest possible price instead of, you know, waiting a day or two. You're also assuming that GameStop doesn't issue any new stock which is already not the case for AMC.

Re: High Short Interest Stocks

#258

Post by mike00632 »

IG_Semmelweiss wrote: post #232
mike00632 wrote: post #136

Earlier quoted context omitted.

Having a high stock price does altogether nothing for the company if they can't sell stock. Similarly, having a low stock price doesn't bankrupt a company.

I think you missed my point. Low stock price wont make a company bankrupt, agree. But if in the process of doing so, you stole value from your own 19yr old stockholders.... then its pretty certain you just painted a bulleye on you. And... They are also your targer demographic customer base. Woops! Lets see how quickly your revenues dip to $0 after that. If you have $0 revenue you dont have a business. Period.

It's GameStop... They already have garbage revenue. They don't have a business. They're failing. Hence the short. Issuing shares while the stock price is high is not only an everyday business move but it's also the correct thing for them to do here. AMC has already done it.

Re: High Short Interest Stocks

#259

Post by bluGill »

baq wrote: post #221
dodobirdlord wrote: post #193

Earlier quoted context omitted.

Not if their short positions expire before the price falls.

borrows don't expire, puts don't have infinite loss potential.

You are mostly correct, but there is one exception. When you own a stock your broker keeps them for you, and can loan them out (for money - this is why brokers don't charge to hold your stocks for you). There are various ways to buy stocks and then get them transformed into a form where they cannot be shorted. If enough people do this the brokers will be forced to get those shorted shares back, which means they can buy your shares back on the market and leave you with the bill.

The above has happened, but it is rare. Not letting your broker deal with holding the stock for you is a big hassle.

Re: High Short Interest Stocks

#260

Post by mike00632 »

worker767424 wrote: post #178
mike00632 wrote: post #128

Earlier quoted context omitted.

Give it a few years. I'm still skeptical that Tesla should be worth more than all the other auto companies combined.

Depends if they can have profit margins a lot higher than other auto companies. They probably can't, but higher profit margins are one way to justify a valuation. Really, it's priced higher because people like the brand, even if it's run by someone easily distracted who used shareholder money to bail out his cousin's solar business who goes around making 420 tweets, and that's when he's not calling people pedophiles.…

I suspect the profit margin for a $50k gas guzzling truck is pretty high.
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