Hedge fund Melvin sustains 53% loss after Reddit onslaught • Hacker News Board

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

#31

Post by nimchimpsky » Sun, Jan 31, 2021, 11:30 PM UTC

nickysielicki wrote: post #20

sdfhbdf wrote: post #6

Were all the shorts actually covered? There seemed to have been a lot of contradictory information over the weekend.

The shorts, from Melvin and others, have mostly been covered, leaving a lot of people holding bags. https://twitter.com/ihors3/status/1356018482471718916 https://s3partners.com/Exclusive.html?utm_source=twitter&utm... This is not some hedgefund guy trying to spread FUD, he's been pretty consistent in his reporting on this over the past week. ie: this post on Thursday https://www.zerohedge.com/markets/we-have-some-bad…

"because our algo will finish its calculation overnight and give a final number in the morning"

Doesn't inspire confidence.

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

#32

Post by nickysielicki » Sun, Jan 31, 2021, 11:31 PM UTC

Judgmentality wrote: post #11

wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The general assumption on WSB is that Melvin Capital is lying and that they haven't closed their positions. I haven't seen any evidence to suggest they've closed it, and have seen circumstantial evidence suggesting they have not. You don't spend money on ads saying "we no longer have a financial stake in this stock" unless you, you know, have a financial stake in this stock. Considering this is a hedge fund, I just a…

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.

https://twitter.com/ihors3 is the source to pay attention to, and he's saying (within the past hour) that collectively, the shorts have been largely covered. It's going to be bloody tomorrow.

... Either that, or magical meme energy is going to defy reason once again. Who knows.

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

#33

Post by aardvarkr » Sun, Jan 31, 2021, 11:31 PM UTC

Judgmentality wrote: post #11

wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The general assumption on WSB is that Melvin Capital is lying and that they haven't closed their positions. I haven't seen any evidence to suggest they've closed it, and have seen circumstantial evidence suggesting they have not. You don't spend money on ads saying "we no longer have a financial stake in this stock" unless you, you know, have a financial stake in this stock. Considering this is a hedge fund, I just a…

I mean, the obvious play is to short the stock now. Advertising that they're out helps cool the temperature of the storm so they're hoping to capture some value on the way down is my guess.

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

#34

Post by briefcomment » Sun, Jan 31, 2021, 11:32 PM UTC

BoorishBears wrote: post #15

vga805 wrote: post #2

We just really like that stock.

And the hedge funds making billions off that sentiment do as well of course, Citadel must be blushing at the runaway success of RH right now

Edit: This is probably wrong.

The funny thing is that the money Citadel makes off of Robinhood is basically front running RH trades. If those trades are for GME, Citadel has to choose between:

- getting their front running revenue while increasing the price and making things worse for shorts (which I'm sure Melvin still has, despite their PR)

- foregoing their RH revenue to not exacerbate the situation for shorts

Pick your poison.

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

#35

Post by flunhat » Sun, Jan 31, 2021, 11:32 PM UTC

joekrill wrote: post #22

MichaelApproved wrote: post #12

Earlier quoted context omitted.

So investors in Melvin won’t abandon them. They want to reassure their own investors that the damage is done and they’re out.

In that case they could most definitely inform their investors directly and there's absolutely no need to make a public statement about it.

They could, but it's common (and not suspicious) for an investor involved in a public fracas to publicly reveal they've exited their position. Bill Ackman did something similar with Herbalife: https://www.investopedia.com/news/billionaire-bill-ackman-du...

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

#36

Post by vga805 » Sun, Jan 31, 2021, 11:34 PM UTC

nickysielicki wrote: post #20

sdfhbdf wrote: post #6

Were all the shorts actually covered? There seemed to have been a lot of contradictory information over the weekend.

The shorts, from Melvin and others, have mostly been covered, leaving a lot of people holding bags. https://twitter.com/ihors3/status/1356018482471718916 https://s3partners.com/Exclusive.html?utm_source=twitter&utm... This is not some hedgefund guy trying to spread FUD, he's been pretty consistent in his reporting on this over the past week. ie: this post on Thursday https://www.zerohedge.com/markets/we-have-some-bad…

In one of the comments Ihor said the algorithm will be running overnight to get a better idea of the actual number...

Is it actually plausible that an algorithm running on presumably one stock needs to run for over a day?

I believe S3, they've been reliable so far. But with this much money at stake, it wouldn't surprise me if they've been bought out to spread misinformation.

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

#37

Post by [deleted] » Sun, Jan 31, 2021, 11:34 PM UTC

newacct583 wrote: post #14

wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The stock is currently around $300, up by a factor of five from last week and much more than that over its historical base. The question should be who isn't shorting GME, not leading questions about a conspiracy theory as to whether or not Melvin actually closed its shorts or not. I mean, I haven't shorted GME personally. But I've absolutely joked with friends that it's an obvious play. Maybe I should.

[deleted]

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

#38

Post by flunhat » Sun, Jan 31, 2021, 11:34 PM UTC

Judgmentality wrote: post #11

wrkronmiller wrote: post #5

> On Wednesday Melvin said it had exited its bet against GameStop and repositioned its portfolio. The firm moved to reduce risk in its investments following a turbulent start to January when it lost 30 percent in the first three weeks. Melvin’s leverage ratio is at the lowest it has been since the firm’s founding in 2014, said a source familiar with the firm. The news of Melvin’s January performance was first reporte…

The general assumption on WSB is that Melvin Capital is lying and that they haven't closed their positions. I haven't seen any evidence to suggest they've closed it, and have seen circumstantial evidence suggesting they have not. You don't spend money on ads saying "we no longer have a financial stake in this stock" unless you, you know, have a financial stake in this stock. Considering this is a hedge fund, I just a…

You should consider at least editing this post given that it has a massive inaccuracy in it, i.e. that Melvin Capital bought ads to communicate not having a position in GME. That was CNBC.

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

#39

Post by viraptor » Sun, Jan 31, 2021, 11:35 PM UTC

PurpleFoxy wrote: post #26

viraptor wrote: post #19

Earlier quoted context omitted.

Does the Reddit part matter? It seems to be meta humour around completely risky but reasonable behaviour. You can explain pretty much everything about it in standard market terms. Mentioning the memes and crude humour is just getting into drama. (And completely optional)

It is somewhat important to describe how these people are not acting rationally or individually and how these internet groups can group together to have very powerful and unusual effects.

And you did just that without referencing either Reddit or memes.

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

#40

Post by loganfrederick » Sun, Jan 31, 2021, 11:36 PM UTC

nickysielicki wrote: post #32

Judgmentality wrote: post #11

Earlier quoted context omitted.

The general assumption on WSB is that Melvin Capital is lying and that they haven't closed their positions. I haven't seen any evidence to suggest they've closed it, and have seen circumstantial evidence suggesting they have not. You don't spend money on ads saying "we no longer have a financial stake in this stock" unless you, you know, have a financial stake in this stock. Considering this is a hedge fund, I just a…

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.…

If the stock continues going up this week, it's that the "magical meme" energy is actually the momentum traders and various celebrities who want to keep the story going by putting more money into it. Of course, they are then likely to flip their positions for a profit before they tell their followers they've sold, leaving the fans holding the bag. Just at a more extended timeframe than you'd predict.