4 ms·

If it's really a short squeeze, then I think it's unfair to say that it's a bubble caused by small retail investors. It's actually a bubble caused by overexpose

If it's really a short squeeze, then I think it's unfair to say that it's a bubble caused by small retail investors. It's actually a bubble caused by overexposed shorters who are forced to buy at any price due to their own doings. Of course noone likes when the small man makes money at the expense of big wall street firms, but it takes some mental gymnastics to view simply buying and then not selling as a more nefarious financial instrument than shorting.

vga805 6y ago
Shorting 140% of the float no less. This falls entirely on these big funds.
- aphextron 6y ago
  >Shorting 140% of the float no less. This falls entirely on these big funds. This is the real issue. Everyone crying "Market manipulation! Call the SEC!" is right, except it's entirely Wall Street's doing. If anything good comes of this, we will see tighter regulation around short limits after this.
  - AlanYx 6y ago
    Does anyone have a link to a good explanation of how 140% of the float can be shorted, given the restrictions that the SEC imposed on naked shorting in 2008? Is there a specific loophole that is being consistently exploited?
    - ohgodplsno 6y ago
      No loophole, simply that the SEC does not exist or matter if you're a hedge fund.
    - gruez 6y ago
      From Matt Levine: >There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine.
      - Vespasian 6y ago
        Is ownership recorded like this in reality or does A transfers her shares to C and gets an IOU (secured by the margin) in return? Then ownership records would not exceed the number of outstanding shares
- throwaway4good 6y ago
  Is that number actually correct? I don’t know the details on how margin lending of us stocks is reported. However I know from European markets that that number would be complex to measure correctly.
  - voisin 6y ago
    Yes it is correct. There’s no loophole. I borrow a share and sell it to someone. Someone else borrows that share and sells it to someone. Same share, borrowed twice and sold twice. As long as each short seller maintains the equity requirement, there’s no issue. What I am unclear on is who takes the counter party risk in the event the short seller cannot make margin calls and goes bust. The exchange I assume? Who insures the exchange if something like this happens where $10 billion is created overnight at the expense of short sellers?
    - throwaway4good 6y ago
      In Europe there is a settlement window of 3 days (and longer as failing to deliver only draws a fee) which makes it possible to sell stocks without holding them.
mam2 6y ago
so much price. it's not just gme, it's all the thigs shorted by melvin capital: Bed bath and beyond for example. This was particularly helped by literally all the other hedge fund once they realised the short squeeze was going to happen anyway.
Clewza313 6y ago
Surely (almost) everybody likes it when that happens? It's hard to have a less sympathetic antagonist than a filthy-rich hedge fund like Melvin that's trying to mint even more money by crushing a company like GameStop that many people have fond memories of.
- Someone1234 6y ago
  This could literally save GameStop. They could (should?) perform a share issue, which would give them much needed capital to reduce their 485.50M debts and or allow a partial pivot (see Toys R Us's re-launch attempt pre-COVID). Regardless of short-squeeze Vs. "meme stock" this is good for GameStop if they capitalize on it.
  - thaumasiotes 6y ago
    They did do a share issue.
    - Someone1234 6y ago
      When? They still have 69.75M outstanding shares, which you can see here isn't an increase: https://www.macrotrends.net/stocks/charts/GME/gamestop/shares-outstanding https://www.macrotrends.net/stocks/charts/GME/gamestop/share... They certainly haven't issued anything near the current price ($200+).
      - shawabawa3 6y ago
        apparently they have pre-approval to release $200m in shares, but perhaps are waiting for after the short squeeze to issue them (take this with a grain of salt, read from a /r/wsb post)
- WrtCdEvrydy 6y ago
  The issue is Melvin is a symbol of everything that is wrong with Wall Street. How can you short a stock to the tune of 140% of all outstanding shares, enjoy a lend ratio of 23% and then bitch and moan when people buy in and cause the lend ratio to blow up to 83%?

vga805 6y ago

Shorting 140% of the float no less. This falls entirely on these big funds.

aphextron 6y ago
>Shorting 140% of the float no less. This falls entirely on these big funds. This is the real issue. Everyone crying "Market manipulation! Call the SEC!" is right, except it's entirely Wall Street's doing. If anything good comes of this, we will see tighter regulation around short limits after this.
- AlanYx 6y ago
  Does anyone have a link to a good explanation of how 140% of the float can be shorted, given the restrictions that the SEC imposed on naked shorting in 2008? Is there a specific loophole that is being consistently exploited?
  - ohgodplsno 6y ago
    No loophole, simply that the SEC does not exist or matter if you're a hedge fund.
  - gruez 6y ago
    From Matt Levine: >There are 100 shares. A owns 90 of them, B owns 10. A lends her 90 shares to C, who shorts them all to D. Now A owns 90 shares, B owns 10 and D owns 90—there are 100 shares outstanding, but190 shares show up on ownership lists. (The accounts balance because C owes 90 shares to A, giving C, in a sense, negative 90 shares.) Short interest is 90 shares out of 100 outstanding. Now D lends her 90 shares to E, who shorts them all to F. Now A owns 90, B 10, D 90 and F 90, for a total of 280 shares. Short interest is 180 shares out of 100 outstanding. No problem! No big deal! You can just keep re-borrowing the shares. F can lend them to G! It's fine.
    - Vespasian 6y ago
      Is ownership recorded like this in reality or does A transfers her shares to C and gets an IOU (secured by the margin) in return? Then ownership records would not exceed the number of outstanding shares
throwaway4good 6y ago
Is that number actually correct? I don’t know the details on how margin lending of us stocks is reported. However I know from European markets that that number would be complex to measure correctly.
- voisin 6y ago
  Yes it is correct. There’s no loophole. I borrow a share and sell it to someone. Someone else borrows that share and sells it to someone. Same share, borrowed twice and sold twice. As long as each short seller maintains the equity requirement, there’s no issue. What I am unclear on is who takes the counter party risk in the event the short seller cannot make margin calls and goes bust. The exchange I assume? Who insures the exchange if something like this happens where $10 billion is created overnight at the expense of short sellers?
  - throwaway4good 6y ago
    In Europe there is a settlement window of 3 days (and longer as failing to deliver only draws a fee) which makes it possible to sell stocks without holding them.

mam2 6y ago

so much price. it's not just gme, it's all the thigs shorted by melvin capital: Bed bath and beyond for example. This was particularly helped by literally all the other hedge fund once they realised the short squeeze was going to happen anyway.

Clewza313 6y ago

Surely (almost) everybody likes it when that happens? It's hard to have a less sympathetic antagonist than a filthy-rich hedge fund like Melvin that's trying to mint even more money by crushing a company like GameStop that many people have fond memories of.

Someone1234 6y ago
This could literally save GameStop. They could (should?) perform a share issue, which would give them much needed capital to reduce their 485.50M debts and or allow a partial pivot (see Toys R Us's re-launch attempt pre-COVID). Regardless of short-squeeze Vs. "meme stock" this is good for GameStop if they capitalize on it.
- thaumasiotes 6y ago
  They did do a share issue.
  - Someone1234 6y ago
    When? They still have 69.75M outstanding shares, which you can see here isn't an increase: https://www.macrotrends.net/stocks/charts/GME/gamestop/shares-outstanding https://www.macrotrends.net/stocks/charts/GME/gamestop/share... They certainly haven't issued anything near the current price ($200+).
    - shawabawa3 6y ago
      apparently they have pre-approval to release $200m in shares, but perhaps are waiting for after the short squeeze to issue them (take this with a grain of salt, read from a /r/wsb post)
WrtCdEvrydy 6y ago
The issue is Melvin is a symbol of everything that is wrong with Wall Street. How can you short a stock to the tune of 140% of all outstanding shares, enjoy a lend ratio of 23% and then bitch and moan when people buy in and cause the lend ratio to blow up to 83%?