Can any current hedgefunders share thoughts on the current Game Stop / WallStreet Bets short squeeze situation?
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Comments ( 369 )
pretty simple: read about mismatch in # of borrowable shares vs. true non-stagnant float vs. shorted shares, what happened in 2008 with Porsche/Volkswagen and how some underestimate the power of many tens or hundreds of thousands of retail accounts, being assisted by HFTs , buying anywhere from $5000 to $1mm+ of this shit during mania moment in market.
S3 Partners has short interest of available float still WAY above 100%...
How exactly does this work?
If a stock has short interest above 100% of float, does that basically mean that all the extra % are naked shorts?
No, SEC is strict on naked shorts.
Let's say you own 100 shares of BA. And then let's say you lend your 100 shares to me so I can sell them short. I go ahead and sell those 100 shares to Jack. Jack is brilliant like you, and he proceeds to do the same thing: he lends his shares to Jane, and Jane sells those 100 shares short to Jill.
Throughout this whole process, there's only 100 shares, but there have been two short transactions. Mathematically, it looks like 200 shares have been shorted. Jane and I would each need to buy 100 shares -- there were two short transactions, so now there must be two buy transactions -- to cover our positions. Normally, when there's a lot of time between transactions, that's not a problem (Jane buys back her 100 shares, returns them to Jack, I buy back my 100 shares from Jack, return them to you); but in a short squeeze, Jane and I are trying to buy 200 shares when only 100 actually exist. Note at no point, though, were the shares naked.
The reserve requirement / money multiplier functions similarly to expand or contract money supply.
I don't know the actual parties involved, but a friend of mine at a MM speculated that the spike noon-1 was someone's fund getting blown up. Fs to pay respect boys.
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Learn moreNo F's for institutions. Should watch their back.
You're right, screw em. I hope we see it go to $1000!
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i keep seeing MM what does that mean?
path less traveled
Multi-manager. Platforms where multiple PMs manage independent leveraged sleeves of capital with strict draw- down and vol requirements like Millennium, Citadel, Exodus, P72, etc.
Edit: Why the heck did people toss shit at this? He asked me what I meant by MM , and I was referring to a friend at a MM hedge fund not a market maker .
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market maker (Citadel, 2 Sig, etc)
Any thoughts on the relative impact of the reddit folks vs. actual funds piling in today / yesterday?
They are saying that they are locked out because the hedge funds contacted the brokers and locked them out purposefully.
Where I am confused is. It looks like the GME is so illiquid and the reditors have broken the market. If the market is broken, then you need to halt trading to fix it (ie circuit breakers as one example). I agree that if they are just blocking them out to block out traders that's wrong. but if all these shares are trading and not enough liquidity is in the market to clear orders what happens. I imagine fixed contracts need to trade first. thus Options and Shorts get filled first then you can repoen to buying. I know usually orders are a first come first serve, but it seems fishy that no one would step in to try and assist the market with liquidity.
Nothing to do with GME's liquidity or collusions. That was entirely due to funding requirements at the brokers' end.
The shit is hilarious, I don't get how some of these people won't get SEC cucked. Legitimately pumping this stock 50%+ in a single day and absolutely shredding whoever had shorts on.
My guess is that borrows were virtually non existent mid day and institutionals were trying to get anything long on they could. Also LMAO at the reddit post today telling people to opt out of any securities borrowing programs with brokers
they won't though.... look up lumber liquidators situation ~1 year ago... same thing on a much smaller scale.... you think the SEC in today's day and age is going after retail investors posting memes and pumping stocks?
I'm sure MMs have set up some controls after Friday. This is pure comedy though. Full retardation from reddit yolo'ers could potentially save the company....if they take advantage of this and sell stock right now at these prices they could easily wipe out all the debt.
WSBers are just a factor of the momentum, the driving force is ECOM Stud Daddy Ryan Cohen 🚀🚀🚀 Read up on what he did with Chewy and what some of the turnaround theses for GME look like with him at the helm.
Edit: Toss more shit you hedgies, you got caught with your flank exposed by a bunch of retail investors armed with stimulus checks and free time. You should feel embarrassed, and I will thoroughly enjoy buying a new Lambo this weekend courtesy of your LPs. I hope none of you were expecting bonuses ;)
WSB infiltrating... it's all over now
This is ridiculous. There is no turnaround for GME... it is the "blockbuster" of 2021. They have 5,500 plus stores dedicated to selling video games, which will be 99% digital in a few years. What is left, silly gaming merchandise and esports jerseys? You don't need 5,500 stores for that...
WE LIKE THE STOCK
Where's your Lambo?
Hopefully you still have internet connection at the homeless shelter
This is a total joke. There is nothing fundamental about GME's move to nearly ~$400. The reversion back into the world of sanity this week is proof of that. This is a massive group of retail investors pushing the needle.
I find it absolutely hilarious that a bunch of retarded psychos on reddit are blowing up legitimate investors at hfs with this shit. imagine spending your entire life honing your craft of investing, only to have a bunch of maniacs meme a stock to the moon and wreck you
Ur moms a whore
#triggered
Well on the contrary...
If you're getting your fund blown up by a bunch of children on Reddit, you're a fucking hack and deserve to have your career wrecked.
This comment makes me LOL every time I read it.
It's like efficient market hypothesis gave way to YOLO market hypothesis, and nobody knows what to do anymore.
It's still the market being efficient, the measurements of value just changed
https://www.wallstreetoasis.com/forums/wsos-rwsb
If you think these "institutional" guys at hedge funds aren't exactly like the retards on WSB then I'm about to shatter your world. Don't put these momentum monkeys on a pedestal, there's way more encouraging each other to pile on and push stuff around to make a quick buck than you can ever imagine. They're just gambling other people's money.
forgot i made this post a year back but i dont disagree. HF performance constantly underperforming S&P should say everything
If you're a HF PM who's short an illiquid, highly shorted name trying to get greedy and play for BK, maybe you deserve to get blown up like this.
What does BK mean in this context?
Bankruptcy
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Isn't there a short to be made now?
could've said the same thing yesterday. interesting to see how this unfolds.
Yes, they've been increasing their short position heavily. Stock has so much further to fall now and they think they can fight the sentiment. This just increases the impact of a squeeze though, so much for being smart managers. I guess they didn't pay attention to Tesla.
Can't get borrows anywhere
not until the first one unfolds
path less traveled
+1
I think it's hilarious. Some guy on there turned $50k into $11M, no joke. (Reddit.com/u/deepfuckingvalue)
But unfortunately the SEC is going to get involved with this at some point and WSB will be shut down by the end of the year. They've flown too close to the sun by getting all this attention in the mainstream media.
You think the SEC is going to try to pop a hole in retail investors enthusiasm about the market? That would just feed the idea that it's not a level playing field - exactly what the current administration doesn't want
This, this, and more of this.
What is the SEC going to say. Hey you individual investor. You can't buy stock in a company for a price you want?
The SEC has minimal power here.
Not exactly. The role of the SEC is to bring legitimacy and stability to the market, which this provides the opposite of. Money Stuff had a great blurb on this today, I highly recommend you check this out. The SEC probably won't pursue this, but they do have an actual case.
Perhaps the SEC will find a creative way of resolving this type of issue. Perhaps setting rules to which degree companies can be shorted. Wasn't GameStop shorted twice as many times as there were actual shares outstanding ? This type of rule would prevent such extreme short squeezes going forward.
They'll go somewhere else. Telegram, random forums, etc
Glad someone got rich by gambling.
DFV didn't gamble. He's been following GME since last spring.
the SEC from China?
and you have professors still claiming markets are efficient
"It was priced in"
Ryan Cohen supplied and we have demanded
YOLO market hypothesis is taking form
Even though I don't believe in the EMH, it still explicitly states markets are only efficient in the long run and in times of volatility, you will see a greater than normal disconnect between the market and reality.
This is worth a bump lol.
Another bump, shit is fascinating. Anybody have thoughts on the Citadel /Point 72 bailout? What kind of terms do they get for that?
Seems very similar to the LTCM bailout in '98
This is actually nothing like the LTCM bailout. The LTCM bailout was orchestrated to keep the financial system from collapsing, the reason for this bailout is so that Melvin has enough capital to stave off the squeeze and continue making money for Cohen and Griffin as they had already invested in Melvin previously.
I want to see Melvin get driven into the ground from this
Me too
Might as well be already. Getting a bailout is the ultimate shame for a hf , and the fact that this one is so public is even worse. If this squeeze doesn't obliterate them (which, after the activities of today is a reasonable scenario), they'd have to make some pretty fucking amazing returns quickly to not have their LP's pull out as soon as they can (which may be a while, but a slow death is a death all the same).
Imagine being the head of some teacher's pension fund and losing all their retirements on fucking gamestop lmao.
Hey, newbie here.
How do HFs even get bailouts? They are kinda the opposite of an industry essential to business function right? Or are these a different type of bailout or something?
This is the tail risk he was selling with trades like that and making his position public. Maybe a great investor but risk management and trading skills are just as important. Probably deserves to be out of business for arrogantly holding on and not stopping out a very long time ago. It doesn't matter if you are right if you can't stay in the game long enough to realize your thesis. That is a big thing that people do not understand on this forum - implementation, trading, risk management are why PMs get paid so much.
Aww yes I am sure the WSB crowd is managing risk so well right now.
What a dumb response. Do you know what fiduciary duty is?
They truly are. They are collectively distributing risk over a huge number of people, it's excellent risk management.
They'll be a stock "meme factor" in future risk models probably
CAPM pricing model updated to include Rmf - Reddit meme factor
Who's next? Express? Macerich?
My thoughts exactly. Either this fundamentally changes how some funds think about risk management or WSB just keeps beating up institutions.
I said this above:
I think the key differentiator is 1. the fact that mass media picked up on this, creating a positive feedback loop of retail investors pouring in with FOMO 2. Discontent with institutional investors during the pandemic as millions lose jobs and die, while Wall Street has a record year. Once institutional money sells off their positions in GME and collects their risk-free leveraged gains (thanks to retail traders), you'll see a ton of people lose their savings overnight, scaring off people from doing this again for a while.
Everyone on this website will shit on wallstreetbets bc we work for the companies in which all these institutional investors work with the hedge funds, etc. Now that retail investors made a quick buck, they are seen as stupid or dumb. And I know I'll get monkey shit bc most of everybody on here is defending rich people than the working class trying to also make money as elites who invest in these funds been manipulating the markets for decades. Stop trying to make an argument of retail vs institutional. Institutional investors pushed the stock down as they been shorting it for a while now and now that you have kids with Robinhood accounts making huge returns on options, I find this just hilarious how tables are turning.
Its absolutely real investing... You just need to recognize the game theory and market psychology behind it. They found something they could exploit and they are doing so.
"real investors" do this all the time. no one understands everything in the market. These people just understand slightly less.
not to mention the person they took down worked for SAC Capital
yeah...im totally sure Steve and all his star SAC Capital boys were COMPLETELY unaware of all the insider trading going on there. Totally removed.
couldnt happen to a more deserving crew of characters (100% ded fkn srs)
Lol I think you have it the other way around. Look at the ratio of SB to MS on the posts calling for Melvin to blow up (I think Pizz got like 12-0 or better in the other thread). Truth is we are (were) all a little jelly of them. That's where the schadenfreude comes from. Watching people who were soaring above us get cut down to size. It's ugly but hey that's humans for you.
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LMAO Melvin deserves to die. Imagine managing state employee pension funds of average people and having naked short risk on and advertising your position. Fuck this guy what an idiot risk manager.
Sorry, but what does this exactly mean? Not super familiar with options...
Basically they tried one of the riskiest types of trades on an illiquid and volatile stock, and now they are getting it shoved up their ass
This 100%. Imagine having analysts cranking away on models 6 days a weekn in theoffice (they had a brutal ib like culture) only to lose it all on naked shorts on a video game store. What a bunch of losers (srs).
Cut him some slack. Risk management wasn't really needed for Plotkin at SAC when he had insider info on all his positions
Fuck that guy and his 6 Miami homes. He's finally facing some accountability for his reckless investments with ordinary people's money, and I'm here for it. Steve's "star protégé" lmao
Not criticizing your opinion on any way, but just to clarify that Melvin doesn't go out and vocally push its short book. They were required to disclose their puts in GME, which is what WSB picked up on. They're not like Carson Block and Muddy Waters.
Melvin capital isn't going to die. It's dead. Murdered if they didn't cover already. Anyone who is short who didn't cover is dead. Every single option solid before 1/25 is in the money on Friday. EVERY SINGLE ONE. If you are naked short, your dead on Friday. Actually every short sold before today is currently ITM, at current prices.
The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee
WSO is not your personal search function.
Isn't this a current short opportunity
if you want to bet on timing the market, yes
This comment didn't last 24 hours
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rip
I bought some very overpriced puts yesterday... not looking great rn
What was your reason for buying puts?
Congrats, looks like you might have minted
Congrats on new millionaire status. Is the hedge fund you're starting hiring?
got wrecked
....
F
Do we know that Melvin was running this short naked? You would've thought people would learn after Ackman's HLF flop. Not defending Melvin but I guess analysts don't run a sensitivity analysis of PnL impact when the stock goes +500%...
Caught a whiff on this on Reddit in early January and bought $20 calls that expired worthless on 1/8. Whoops.
"I don't know how to explain to you that you should care about other people."
Mmm what would they be worth post the Elon tweet?
I bought $250 of them for 59 cents a piece. The same call option with this Friday's expiration closed at $125 today. So that's about $250 -> $50,000.
"I don't know how to explain to you that you should care about other people."
You think that's bad? I bought a handful of Jan 2022 calls with a strike price of $12 for $0.73 back on March 10 2020...
I sold them on March 28th 2020 for $5.20...
:s
Brutal. I guess just HODL when it comes to meme stocks?
a 7x return is never a bad thing! (except when it could have been 30,000x)
"I don't know how to explain to you that you should care about other people."
You would think that Cohen/Griffin -- as part of agreement re: infusion -- made Plotkin hedge his original short position... right?
I would think so...but then again, I'm no expert
could they have bought up the equivalent so that when the squeeze happens, they can make it a perfectly smooth transaction
path less traveled
I have 5 years of experience shitposting in the WSB discord and know several of the mods in real life. Is that enough for a job at a fund now?
HF guys fucking retail for years get fucked - poetic.
This idea that it was all random kids on WSB is totally wrong. You think that professionals didn't smell blood too here? Classically stupid to basically announce exactly where the price would need to go to in order to blow them up and complete the stop out after putting it in the WSJ. I almost fell off my chair when I read that.
What price is that?
ya wtf i wanna know too
path less traveled
To be fair, it's a common tactic of funds to announce short positions, because that usually helps you. Just didn't expect the retail investors to meme it, and other institutional investors seeing an opportunity to utilize the retail traders to leverage their positions.
After the Herbalife shenanigans years ago (which was total bullshit fwiw, that should have been declared a pyramid scheme and illegal lmao) and this, you really gotta wonder if it'll change the dynamics of announcing short positions.
Don't know much about the options market so can someone dissect what is to happen? Understand most of the calls expire this Friday and if it dosen't go below $60 (that was the max strike then right?), the MMs have to buy back c.8m shares in the open market next week?
Bump, interested as well
+1, also interested
MMs don't sell naked calls. It'll be dynamically delta-hedged. There calls are too deep ITM (close to delta 100) so MMs don't need to buy any more stock on expiry
ELI5? What does dynamically delta hedged mean?
Citron got what they got.
Is there any way to know what % of the options are going to expire Friday? Forcing the buying of the stock at that market price ?
How would we know how long that window is and what to sell the stock at?
Tendies for all, let's go to the moon boys.
if some smart hedge fund guy could clear this up, that would be amazing
path less traveled
Interesting not to see anyone talking about the RH, Citadel, and WSB triangle here. All the retail investors on WSB trading options on RH who then sells those orders to Citadel milliseconds before they are filled to steamroll Citadel's HFT algos which just takes this to the moon 🚀. Perfect storm and Citadel is going to be the biggest winner off the whole deal lol
What is the math that they are they are biggest winner? They are already down 2bn on their Melvin trade. You think front running HFT makes up for that? I don't see how they don't next take a huge loss here.
$2 bn injection for a revenue share agreement. A lot of different ways for this to go but you can bet Citadel and point72 are the wolfs in this situation
Are they though? According to BBG, Cohen put $200m into Melvin at the start, which was worth $1bn pre-crash. So even after a 30% drop that's 3.5x MoM in 6-7 years or low-20s net IRR ...
How long until jpow bails them out?
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path less traveled
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