CNN Declares that the Gamestop stock surge is Trump's fault

[rexdutchman]

Peta and idiotism go hand in hand ,,,,,,,,,,,,,Open them borders 45 million in D**gs just stopped in Denton
from guess

[Lucas McCain]

Originally Posted by NBruno

Melvin Capital was shorting Game Stop Citadel and Point 72 gave them 2.75 billion to unwind their position. All three are top rated companies by Bloomberg. Over 1.6 million options contracts were traded on some days for $150 that's 240 million dollars. No way retail investors have that much money to spend.This was Hedge Fund vs Hedge Fund.

If I recall correctly, Bernie Madoff's firm was ranked high on Bloomberg as well. The main person who really benefited from that was Bobby Bonilla because the owners of the Mets decided they would rather pay him a million dollars a year for the next 30 years and not just pay him off immediately because they thought they would make more investing with Madoff.

All I know is I would never work for a hedge fund that wants to be a day trader because there is no job security there when the gambles eventually and inevitably turn sideways.

[VitaMan]

No one ever mentions where hedge funds get their investor money from. Many of them have billions of investor money. Certainly it is mostly institutional money, pension funds, and the like.


But no one ever discusses how the hedge funds do their sales pitch to get them to invest in their fund. Must be great salesmanship. Or possibly the institutional investors boards don't pay enough attention.....they want to get the money too, and avoid any responsibility for bad investments...so they pass it off.



Anyway, hedge funds will always be around, gambling, with their compensation structures of 2% management fee guaranteed, and 20% of all profits. Quote "We were all making money." That insures they will continue to exist and take ridiculous bets.



Think about it.......it is the same as having all your friends deposit money into your checking account. If investments make money, you take 20%. If not, you do not lose anything.....in fact you still get 2% for your enjoyment. No wonder many hedge fund owners own pro sports teams.

[Tiny]

Originally Posted by Kinkster90210

I understand that shorts inject liquidity into the markets and that can be a good thing.

What I don't understand is why the hedge funds or anyone else can short MORE shares than actually exist. I think I read that the number of shorted shares is 140% of $GME's total shares. Can that be true?

The situation makes it practically impossible for the short seller to find shares to buy back, which drives the price even higher.

Why aren't shorts capped at 25% or 50% of all of a company's shares? You would get at least some of the benefits of liquidity without having these insane short squeezes.

I read up on that last week.

First, the number of shorted shares has never been 140% of the total number of shares. Short interest has been around 62 million shares, plus or minus 8 million, going back to January, 2020, and the number of outstanding shares is 69 million. The 140% would be the short interest divided by the float, which ideally is the total number of shares less the number of restricted shares, which have not been registered with the SEC and cannot be sold. However the float is actually approximated by subtracting the number of shares held by insiders "and those deemed to be stagnant shareholders." Right now the float is supposed to be 50.2 million shares. Looking over the shareholder list, which is mostly institutional, I believe the number of shares that can be loaned to short sellers is actually higher than 50.2 million shares. It could be more than the 62 million shares sold short. So, in other words, if people were calculating the float correctly, the short interest ratio might be less than 100%. Investors and their stockbrokers have a lot of motivation to loan their shares of GameStop out to short sellers, because the borrow rates are very high.

So people describe two ways the short interest can exceed 100% of the float. Here's the first. Say Kinkster purchases 1,000,000 shares of Mustang Ranch Holdings Inc. (MRH) If the shares are in a margin account, his broker can loan the shares to short sellers, without Kinkster's permission. For GameStop, currently that's at a rate of about 30% to 40% per annum based on the value of the position, although I've seen it vary from 0% to 8000% per annum for other companies. Anyway, if Kinkster is smart, he'll pick a broker that passes the lion's share of that 30% or 40% or whatever onto him.

So say Tiny, infamous short seller, borrows those shares from Kinkster, and sells them to Oeb. Tiny, being the rapacious bastard that he is, decides he wants to borrow more shares. So he borrows the million shares Oeb owns and sells them short too.

So now you've created a 2 million share short position out of 1 million shares.

Now I realize there's something squirrely about this example, but I've read it in two different places. And since everything you read is true, this must be true.

Now, for the sake of argument, to illustrate a short squeeze, lets say that Kinkster was a greedy, rapacious bastard too, and he actually owned all the shares of MRH. There are only 1 million shares in the company, and Kinkster owns them all.

Oeb sells his 1 million MRH shares at a price of 100. Now, remember Tiny had borrowed Oeb's 1 million shares. He's got to find someone else to borrow those shares from within two days, the settlement date for Oeb's sale, or he's got to buy the shares in the market, so Oeb will have them to deliver to his buyer. The brokers and the clearing firms by the way are standing in the middle of this, and will have to fork over real or fictional shares to Oeb's buyer and guarantee Oeb will get his money on settlement date.

So Tiny's in a pickle. There are no shares left to borrow. Where's he going to get 1 million shares from? From Kinkster of course. Kinkster's in the catbird seat. He happily sells his shares to Tiny for $1000 per share, being 10X what Oeb got for his shares. Tiny uses these shares to replace shares he borrowed from Kinkster. Tiny, who's now out $1 billion dollars, jumps out of a tall building.

The second way this can happen -- options market makers can sell naked shorts. That is, they don't necessarily have to borrow the stock before selling short. Supposedly some of the less scrupulous (probably meaning all) market makers, which include some hedge funds, take advantage of the rules to make an outsized profit when borrow rates on a stock are high. You see a lot more naked shorting by market makers when it's expensive to borrow a stock.

Anyway, when settlement date comes around and it's time for the market maker to deliver the shares to the buyer, the market maker just gives a big fuck you to the Depository Trust & Clearing Corporation (DTCC). The DTCC is the clearing firm to clearing firms. It creates fictional shares, that don't really exist, to deliver to the buyer, until such time as the market maker comes up with the shares to deliver. So the market maker may just be putting off the inevitable, but when you've got 50 million shares trading daily in an issue with 69 million shares outstanding, you can do this repeatedly, like kiting checks. And you add up the number of shares held by people who think they own shares and it's greater than 69 million.

In summary, I may not know WTF I'm talking about, but the truth probably lies in one or both of the explanations above.

I hope you've learned a valuable lesson from all this Kinkster. Don't come to a hooker board to learn about short selling.

[Texas Contrarian]

.

Here's an interesting story for anyone who likes to read about the history of markets -- or history in general, for that matter. (Few things were more important than railroads in the late 19th century.)

Even though this took place in the pre-technology era, it seems that the existence of "wild west" Wall Street action is really nothing new.

https://globalfinancialdata.com/comp...ner-in-history

Of course, stuff unfolds at the speed of light in today's high-tech era!

.

[VitaMan]

Everybody and their brother tries to start a hedge fund.

Most give returns that are less than market averages. Not hard to explain when they take 20% of the profits.


A few examples:


Ron Insana, now financial reporter for CNBC.......failed

former Citibank chairman ran a hedge fund on the side, while he was doing his day job.....investors got wiped out

the Rock's wife.....have no idea how her fund is doing or if it still exists



You don't need 3 degrees, or even an Ivy league school degree, to start and run a hedge fund. It doesn't take too many brains. It's all about getting the money, just like the current group that are running up Gamestop.


What you do need is access to institutional investors. An Ivy league degree may help you do that.

[Lucas McCain]

I would think the regulations would be more stringent on hedge funds years ago when I worked at them. I haven't kept track to see the extent that they have changed. I guess not by much. I just didn't like the hours and bullshit. You can fly pretty free and loose at them and I don't like to work at places like that. I don't mind greed, but hedge fund greed is a whole other level of greed. You make a lot of money but it can be just a dirty business. I like money, but I didn't like making it that way so I had to bounce the fuck out of that industry for my own sanity.

[gnadfly]

Originally Posted by VitaMan

No one ever mentions where hedge funds get their investor money from. Many of them have billions of investor money. Certainly it is mostly institutional money, pension funds, and the like.


But no one ever discusses how the hedge funds do their sales pitch to get them to invest in their fund. Must be great salesmanship. .....

My guess is their sales pitch goes something like: "...let me help you wash that money."

[Lucas McCain]

The sales pitches are the ROI. It's that simple. If institutions believe they will make money, they will invest regardless of how ridiculous it sounds. Like I've said, it's a dirty and greedy industry. When you don't have a highly regulated industry, there are few consequences. I would guess that they are more highly regulated now, but they sure the fuck were not when I was in that space.

By the way, the ROI was bullshit half of the time so I couldn't leave the hedge fund world fast enough despite the money. I'm trying to die being a butt virgin. I'm not trying to mess that up in prison and some gang decides to make me their prison bitch. I would just be like just fuck me in the ass because I surrender. I'm getting my ass pounded for a fucking hedge fund and eating dog food every single fucking day. That's not cool.

It kind of saddens me. Shouldn't I be able to give you consent before you fuck me in the ass? Call me crazy, but that's the classy thing to do.

I'm a white collar guy. I don't know that gang life. Those fuckers would figure out that I was playing every side and they would tear my ass apart. I'd be wearing depends within a month after they were done tearing my asshole apart.

[Tiny]

Originally Posted by CaptainMidnight

.

Here's an interesting story for anyone who likes to read about the history of markets -- or history in general, for that matter. (Few things were more important than railroads in the late 19th century.)

Even though this took place in the pre-technology era, it seems that the existence of "wild west" Wall Street action is really nothing new.

https://globalfinancialdata.com/comp...ner-in-history

Of course, stuff unfolds at the speed of light in today's high-tech era!

.

Damnit Midnight, why couldn't you have posted that last Tuesday. It would have saved me money. It sounds like Mr. Morgan and Mr. Schiff, who allowed the shorts in Northern Pacific to settle up at $150 a share instead of bankrupting them, were much more forgiving than the sharks over at Wall Street Bets on Reddit.

I highly recommend Reminiscences of a Stock Operator, referenced in the piece. It's fiction, but ostensibly about Jesse Livermore, a real life trader and short seller who made and lost several fortunes before losing it all for the last time and committing suicide. He made $100 million shorting shares during the 1929 stock market crash. That would be $1.5 billion in 2020 dollars.

[dilbert firestorm]

Originally Posted by Lucas McCain

I would think the regulations would be more stringent on hedge funds years ago when I worked at them. I haven't kept track to see the extent that they have changed. I guess not by much. I just didn't like the hours and bullshit. You can fly pretty free and loose at them and I don't like to work at places like that. I don't mind greed, but hedge fund greed is a whole other level of greed. You make a lot of money but it can be just a dirty business. I like money, but I didn't like making it that way so I had to bounce the fuck out of that industry for my own sanity.

so you acknowledge that hedge funds are dirty?

[dilbert firestorm]

Originally Posted by gnadfly

My guess is their sales pitch goes something like: "...let me help you wash that money."

yeah.. wash sales.

I see that mentioned in the definition section of the scottrade/td america's help section.

[Ripmany]

Who are there going to blaine dip on?

[NBruno]

Originally Posted by Ripmany

Who are there going to blaine dip on?

Biden's 40 executive orders and his America last agenda. No one with more than two brain cells will believe the lies

[Lucas McCain]

Originally Posted by dilbert firestorm

so you acknowledge that hedge funds are dirty?

Many are. It's a whole different level of dirty depending on the firm. The firms I worked for were fairly clean but the CEOs were still paying themselves at least $60MM a year. The returns certainly didn't justify that high level of compensation. They weren't public so there were no 10-Ks or 10-Qs so there was very little accountability as far as transparency. The last hedge fund I worked for, the CEO made $110MM that year. I was like I need to get out of this crooked greedy life before I get arrested.

You make a lot of money but it's a lot of dirty money so I left that industry and I'll never go back to it unless it is highly regulated and not rogue like it was when I worked in it. That was a level of greed that I just wasn't comfortable with after a while. I like greed, but I just don't like crossing the boundaries to potentially illegal greed. It is really easy to cross that boundary when you work at a hedge fund firm with very few trading guidelines.

This is not political. It is about greed. It has nothing to do with neither Trump nor Biden. As I have said in an earlier post, it's not that hard to manipulate a stock price.