Gamestop, AMC, and the Angry Hedge Funds

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bo_sox48
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Re: Gamestop, AMC, and the Angry Hedge Funds

#41 Post by bo_sox48 » Sun Jan 31, 2021 3:21 pm

goldfinger0303 wrote:
Sun Jan 31, 2021 8:39 am
bo_sox48 wrote:
Sun Jan 31, 2021 3:55 am
but if 10 hedge fund managers sat together in a ritzy hotel lobby drinking obscenely expensive scotch and agreed to pump and dump a stock and agreed on profit targets, is that market manipulation?
Yes. That's....that's actually a textbook example of market manipulation.
That’s right, it technically is, and yet nobody would care lol

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Re: Gamestop, AMC, and the Angry Hedge Funds

#42 Post by bo_sox48 » Sun Jan 31, 2021 3:24 pm

The fact that people are actually saying that all these hedge fund managers are held accountable for breaking the rules like a month after worst-person-on-Earth Steve Cohen bought a baseball team in New York City and was cheered on as the rich guy here to save the day is just laughable.

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Re: Gamestop, AMC, and the Angry Hedge Funds

#43 Post by RoganJosh » Sun Jan 31, 2021 3:57 pm

Hedge funds bends and breaks rules all the time - and everything they do is notoriously monitored. I'm not trying to defend hedge funds here. But you guys are blinded by your desire to punish the hedge funds.

Sure, Melvin capital took losses. Who capitalized from those losses? The guys that sold them the shorts capitalized from those losses.

Correct me if I'm wrong, but reddit users did not sell those shorts. The reddit users bought stock at a low price en masse, and then sold it at a higher price. That's a pump and dump. They're not capitalizing of Melvin's losses, they're capitalizing of the losses of the retail investors who enter the frenzy late. They're just using the hedge fond connection to justify running a classical fraud scheme.

And that's what this is. This is not retail investors capitalizing at the cost of hedge funds, this is retail investors scamming other retail investors.
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Re: Gamestop, AMC, and the Angry Hedge Funds

#44 Post by goldfinger0303 » Sun Jan 31, 2021 5:09 pm

I think also more to the point is, nobody on r/wsb has made a mathematical price target case from the short squeeze. That is the kind of stuff that will defend you from accusations of a pump and dump.

Build a case for what the share price should go to. You have past examples of short squeezes as well (some marijuana stock a few years ago spiked 1600%), you have the number of free float shares versus shorted shares, so why aren't they doing that?

Instead, they're telling people to hold on to $1000 while we don't know if they're selling out or not.
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Re: Gamestop, AMC, and the Angry Hedge Funds

#45 Post by Ezio » Sun Jan 31, 2021 5:49 pm

RoganJosh wrote:
Sun Jan 31, 2021 3:57 pm
Hedge funds bends and breaks rules all the time - and everything they do is notoriously monitored. I'm not trying to defend hedge funds here. But you guys are blinded by your desire to punish the hedge funds.

Sure, Melvin capital took losses. Who capitalized from those losses? The guys that sold them the shorts capitalized from those losses.

Correct me if I'm wrong, but reddit users did not sell those shorts. The reddit users bought stock at a low price en masse, and then sold it at a higher price. That's a pump and dump. They're not capitalizing of Melvin's losses, they're capitalizing of the losses of the retail investors who enter the frenzy late. They're just using the hedge fond connection to justify running a classical fraud scheme.

And that's what this is. This is not retail investors capitalizing at the cost of hedge funds, this is retail investors scamming other retail investors.
When Melvin has to cover their shorts, they eat their loss. By retail investors buying the stock and driving it up, these same retail investors get to sell to Melvin. Melvin will eventually be forced to buy the stock at the insanely high price from retail investors.

This is how retail investors can directly profit off of Melvin. Technically you're correct that they're not "profiting off the Melvin's losses", but they will be profiting while causing Melvin's losses. At least the ones who get to sell.

Because of how big the short positions are, most people should be able to sell.

In my opinion, that's the largest difference between this and a generic "pump and dump" like you have described: there's a guaranteed external buyer who *has* to purchase a huge amount of stock in the future. In Pump and dumps, the ones who lose most are the guys who buy in at the end, and in this case we *know* a particular hedge fund still has to buy.
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Re: Gamestop, AMC, and the Angry Hedge Funds

#46 Post by flash2015 » Sun Jan 31, 2021 6:18 pm

I just saw this thread on wallstreetbets. People are buying at $300 and still believing they are guaranteed to make money:

"When all is said and done, we should all be extremely richer than we were in December."

https://www.reddit.com/r/wallstreetbets ... ease_read/

It isn't about "sticking it to the man". They are in it because they believe they will make lots of money.

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Re: Gamestop, AMC, and the Angry Hedge Funds

#47 Post by flash2015 » Sun Jan 31, 2021 6:48 pm

Ezio wrote:
Sun Jan 31, 2021 5:49 pm
RoganJosh wrote:
Sun Jan 31, 2021 3:57 pm
Hedge funds bends and breaks rules all the time - and everything they do is notoriously monitored. I'm not trying to defend hedge funds here. But you guys are blinded by your desire to punish the hedge funds.

Sure, Melvin capital took losses. Who capitalized from those losses? The guys that sold them the shorts capitalized from those losses.

Correct me if I'm wrong, but reddit users did not sell those shorts. The reddit users bought stock at a low price en masse, and then sold it at a higher price. That's a pump and dump. They're not capitalizing of Melvin's losses, they're capitalizing of the losses of the retail investors who enter the frenzy late. They're just using the hedge fond connection to justify running a classical fraud scheme.

And that's what this is. This is not retail investors capitalizing at the cost of hedge funds, this is retail investors scamming other retail investors.
When Melvin has to cover their shorts, they eat their loss. By retail investors buying the stock and driving it up, these same retail investors get to sell to Melvin. Melvin will eventually be forced to buy the stock at the insanely high price from retail investors.

This is how retail investors can directly profit off of Melvin. Technically you're correct that they're not "profiting off the Melvin's losses", but they will be profiting while causing Melvin's losses. At least the ones who get to sell.

Because of how big the short positions are, most people should be able to sell.

In my opinion, that's the largest difference between this and a generic "pump and dump" like you have described: there's a guaranteed external buyer who *has* to purchase a huge amount of stock in the future. In Pump and dumps, the ones who lose most are the guys who buy in at the end, and in this case we *know* a particular hedge fund still has to buy.
Lots of big assumptions here. This assumes that shorts will just throw up their hands and all start buying on a certain day without taking any other action. This assumes that shorts with the biggest losses will actually have the money to pay the money for the shares at these extraordinarily high prices. This assumes that there can be a coordination of the GME crowd to sell in some systematic way. It assumes that high frequency traders/hedge funds and others won't also be also taking advantage of any coordinated decision to sell. It assumes there won't be trading halts/other restrictions etc. on the way down stopping retail investors from getting out.

This is all going to end in tears for most people involved.

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Re: Gamestop, AMC, and the Angry Hedge Funds

#48 Post by flash2015 » Mon Feb 01, 2021 5:11 pm

Short interest has already fallen massively, from 114% of free floating shares to 39%:

https://www.bloomberg.com/news/articles ... e-covering

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Re: Gamestop, AMC, and the Angry Hedge Funds

#49 Post by MajorMitchell » Tue Feb 02, 2021 3:08 pm

I asked my whippersnapper nephew about this and he thought it most amusing & told me the tale as he knows it.and it was most entertaining. His tiny wargame consultancy/host(?) site is going so well the blighter has gone and registered it with Australian Tax Office & got an Australian Business Number.
People actually pay him to coach them in playing some daffy computer wargame. He said the best part of having his own operation is occasionally telling problem customers that their account is closed and refunding their money.
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