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Are you saying that Citadel just lent someone money to close short positions worth a very significant percentage of their total assets? (Melvin having 11 bilio

by raducu 6y ago

Are you saying that Citadel just lent someone money to close short positions worth a very significant percentage of their total assets? (Melvin having 11 bilion in total assets and Citadel giving them 3 billion). That's what I was pointing out! Melvin did not close their shorts(as they said they did), they just got more rope from Citadel, and Citadel was willing to do just that knowing they can manipulate the market. The narative of Melvin was "Citadel gave us 3 billion dollars, we closed our shorts at a loss, you won wsb, aren't you happy, you won, now leave us alone and stop buying".

JumpCrisscross 6y ago
> Citadel just lent someone money to close short positions worth a very significant percentage of their total assets? Yes. Those other assets are presumably uncorrelated to this short position. If they were fire sold, depending on the assets, they could have gotten 20¢ or 30¢ on the dollar. That discount gives Melvin the incentive to borrow, even at exorbitant rates. It protects the rest of the portfolio. With the bailout, the GameStop loss is capped and eaten by LPs. That sucks. But it sucks less than eating that loss and selling off the rest of the portfolio for peanuts. > Melvin did not close their shorts(as they said they did) You're alleging securities fraud. This may be the case! But we have zero evidence of it. And if Citadel and Point72 invested $3bn to aid and abet securities fraud, that would be quite stupid.
- PicassoCTs 6y ago
  They got away with worse in 2008?
  - fractionalhare 6y ago
    No "they" didn't. Wall Street is not a homogenous thing. You're thinking of banks in particular, which are about as different from hedge funds categorically as Facebook and Salesforce. Sure they're both tech companies with software products, but they have entirely different business models.
    - jachee 6y ago
      I believe GP was specifically referring to Citadel, nee SAC: https://popular.info/p/the-merry-adventures-of-robinhood https://popular.info/p/the-merry-adventures-of-robinhood
      - kgwgk 6y ago
        You may be confusing SAC / Point72 with Citadel.
        jachee 6y ago
        Nope it was a joint infusion: "[Melvin] was rescued with a $2.75 billion cash infusion from two other hedge fund titans, Steve Cohen and Ken Griffin. Cohen was Plotkin's former boss at SAC Capital Management. SAC shuttered after the firm pled guilty to insider trading and paid $1.3 billion in fines. Cohen was not personally charged. Griffin runs Citadel LLC ... In exchange, Citadel and Point72, the successor firm to SAC, own an undisclosed stake in Melvin Capital Management."
        kgwgk 6y ago
        I was talking about the "Citadel, nee SAC" bit in your comment.
- selectodude 6y ago
  > You're alleging securities fraud. I stare at this crap all day and I've seen no indicator that Melvin has closed a large percentage of their position, let alone all of it. I will 100 percent allege securities fraud.

by raducu 6y ago

JumpCrisscross 6y ago

> Citadel just lent someone money to close short positions worth a very significant percentage of their total assets? Yes. Those other assets are presumably uncorrelated to this short position. If they were fire sold, depending on the assets, they could have gotten 20¢ or 30¢ on the dollar. That discount gives Melvin the incentive to borrow, even at exorbitant rates. It protects the rest of the portfolio. With the bailout, the GameStop loss is capped and eaten by LPs. That sucks. But it sucks less than eating that loss and selling off the rest of the portfolio for peanuts. > Melvin did not close their shorts(as they said they did) You're alleging securities fraud. This may be the case! But we have zero evidence of it. And if Citadel and Point72 invested $3bn to aid and abet securities fraud, that would be quite stupid.

PicassoCTs 6y ago
They got away with worse in 2008?
- fractionalhare 6y ago
  No "they" didn't. Wall Street is not a homogenous thing. You're thinking of banks in particular, which are about as different from hedge funds categorically as Facebook and Salesforce. Sure they're both tech companies with software products, but they have entirely different business models.
  - jachee 6y ago
    I believe GP was specifically referring to Citadel, nee SAC: https://popular.info/p/the-merry-adventures-of-robinhood https://popular.info/p/the-merry-adventures-of-robinhood
    - kgwgk 6y ago
      You may be confusing SAC / Point72 with Citadel.
      - jachee 6y ago
        Nope it was a joint infusion: "[Melvin] was rescued with a $2.75 billion cash infusion from two other hedge fund titans, Steve Cohen and Ken Griffin. Cohen was Plotkin's former boss at SAC Capital Management. SAC shuttered after the firm pled guilty to insider trading and paid $1.3 billion in fines. Cohen was not personally charged. Griffin runs Citadel LLC ... In exchange, Citadel and Point72, the successor firm to SAC, own an undisclosed stake in Melvin Capital Management."
        kgwgk 6y ago
        I was talking about the "Citadel, nee SAC" bit in your comment.
selectodude 6y ago
> You're alleging securities fraud. I stare at this crap all day and I've seen no indicator that Melvin has closed a large percentage of their position, let alone all of it. I will 100 percent allege securities fraud.