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Thread: Gamestop

  1. #1

    Default Gamestop

    Up just another 200% today.


    Melvin Capital, hedge fund targeted by Reddit board, closes out of GameStop short position

    Melvin Capital closed out its short position in GameStop on Tuesday afternoon after taking a huge loss, the hedge fund’s manager told CNBC.

    CNBC could not confirm the amount of losses the firm took on the short position. Citadel and Point72 have infused close to $3 billion into Melvin Capital to shore up its finances.

    Melvin manager Gabe Plotkin told Andrew Ross Sorkin that speculation about a bankruptcy filing is false.
    https://www.cnbc.com/2021/01/27/hedg...n-tuesday.html


    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.


  2.  
  3. #2

    Default Re: Gamestop

    https://www.reuters.com/article/us-m...-idUSKBN29W0R9

    Melvin Capital, founded in 2014 by Gabriel Plotkin, said it does not comment on positions and trading.
    I'd like to know how what Melvin is doing here wouldn't be considered manipulation.

  4.  
  5. #3

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    Default Re: Gamestop

    Quote Originally Posted by SteelSaving View Post
    Melvin...
    Melvin was the ones who got squeezed. Forced to buy back shares at a major loss. But they weren't the only ones, the stock was some 150% of the float which is absolutely unheard of.

    The manipulation was from r/WSB who flooded the market with buy orders. They are the ones who will be investigated by the SEC.

  6.  
  7. #4

    Default Re: Gamestop

    Quote Originally Posted by Bullitt View Post
    Melvin was the ones who got squeezed. Forced to buy back shares at a major loss. But they weren't the only ones, the stock was some 150% of the float which is absolutely unheard of.

    The manipulation was from r/WSB who flooded the market with buy orders. They are the ones who will be investigated by the SEC.
    I don't see how sharing public information is manipulation. And I still stand behind a bunch of people on a reddit group cannot affect the market this much.

    If Melvin is lying to spread news on TV, internet, and newspapers to save their own behinds, that is textbook manipulation.

  8.  
  9. #5

    Default Re: Gamestop

    Now brokers are not allowing people to buy shares of certain stocks, only sell.
    So if people are still allowed to sell, who is allowed to buy?

    How is that not market manipulation?

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  11. #6

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    Default Re: Gamestop

    Funds sell shares short for many reasons, and one is because their research (which is much more advanced than what you can do on yahoo finance or stockcharts) tells them when a certain company is overvalued. In this case, Gamestop is a POS company. It is literally a Blockbuster Video for video games.

    Melvin is not the only fund that thinks the company is junk when 150% of its shares are sold short. Leverage and options allow this to happen.

    The squeeze was initiated by message boards. AI momentum trading strategies can pull key words and trade based off them. When the squeeze hits, there aren't 150% of the shares left to buy back. It's akin to back in the early 1900's when fat cats would corner a stock. There are plenty of history books to read on this phenomenon. Raiders would run up a stock in a pool until they bought up all the shares and then would have short sellers by the tail. Short sellers had to negotiate a price because the stock seized up.

    Melvin manipulating? Do you have the story right? Melvin got blown out of the water. They needed an infusion from two high profile funds to stay afloat.

    There are no shares left for short sellers to buy back. The system is not functioning properly. I'm for free markets too, but there are limits to everything.

    Don't think Redditors are going down for this? More history from 2000.

    By day, Jonathan G. Lebed was just another 15-year-old high school student in Cedar Grove in northern New Jersey. But after school, securities regulators say, Mr. Lebed masterminded a stock manipulation scheme on the Internet that earned him almost $273,000 in illegal gains.

    Yesterday, just days before Mr. Lebed's 16th birthday, the Securities and Exchange Commission accused the teenager of developing a scheme to increase the prices of nine obscure, low-price stocks he had bought by sending numerous optimistic messages to investing chat rooms on the Internet. As other investors read his messages and bought the shares, prosecutors said, Mr. Lebed sold his holdings at profits ranging from $11,000 to $74,000 a trade. The scheme began in August 1999, when Mr. Lebed was 14, prosecutors said, and continued until Feb. 4 this year.
    https://www.nytimes.com/2000/09/21/b...ock-fraud.html

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  13. #7

    Default Re: Gamestop

    I believe there is a difference between sending out optimistic messages based off nothing to drive up a price and sharing public information to point out that hedges shorted more shares than exist.

    As for Melvin (and the others)

    https://www.investopedia.com/terms/n/nakedshorting.asp

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  15. #8

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    Default Re: Gamestop

    Much of that naked shorting is still done by market makers. When you have thousands of YOLO's buying calls, somebody has to take the opposite trade or at least be prepared for it. Most options expire worthless or are sold for a premium. People rarely take possession of options shares.

    In this case, people were taking possession because options literally didn't even exist at those prices. When they start taking possession of their shares (calling them back) somebody needs to provide them as per the options contract. In this case the market makers didn't have enough shares available give, so they had to create them out of thin air until they could find some sellers. That's why people weren't allowed to buy, there weren't any available from even the market makers. When you lose them, there's nothing there to negotiate bid/ask.

    I'm far from an expert on all this as there are very complicated options market strategies out there.

    Here's an idea from the street today.

    https://realmoney.thestreet.com/inve...-seen-15550756

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  17. #9

    Default Re: Gamestop

    Boom! Just like that, the gap is filled.

    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.


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  19. #10

    Default Re: Gamestop

    Who is buying the shares?

  20.  
  21. #11

    Default Re: Gamestop

    Elon Musk?
    Tom
    Market Commentary | My Blog | TSP Talk Plus | |

    I am not a Registered Investment Advisor and this is not investment advice. Please do your own due diligence.

  22.  
  23. #12

    Default Re: Gamestop

    GME right now looks a lot like VW did in 08 before it shot up.


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