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Melvin capital [claimed to have] exited the short position two days ago, the loss is realized.

by timack 6y ago

ivalm 6y ago
It was a company announcement material to the fund's prospects, if they lied it would be grounds for a securities fraud suit from their investors.
- thereare5lights 6y ago
  Do we know if the fine that they would get is smaller or larger than the amount they stand to save by lying?
  - ivalm 6y ago
    But there is no reason to think they are lying. They needed $3b to close, they got 2.85b cash bailout, it makes sense that they closed.
    - thereare5lights 6y ago
      The reason is if they can make more money by lying. If still make a net profit even after any penalties for lying, then why wouldn't they lie? It's not like wall street has shown itself to be upstanding actors.
      - ivalm 6y ago
        Because they know this will be investigated throughly given the optics and they would be caught in fraud. The simpler explanation is that the current price point is clearly unsustainable and thus shorting GME is a crowded trade. As one fund exits another fund enters. If GME goes to $1000 people would still be shorting because, again, this price is unsustainable. It would be new people shorting though as most of the funds shorting at $300 would exit by the time it goes to $1000 (hypothetically). At the same time there is no world in which GME is worth more than $100 in 3 months, so the question now is who will be the greater fool holding the bag when it goes down. Whatever money shorts will lose now they will regain on the way down (although the short sellers losing money and making money might be different funds as some exit and some enter positions). Of course, the real money makers here are MMs that will be collecting a huge bid-ask spread on both directions. I don't think there is much good news for the retail investors though. As with all bubbles the people who got in early and had the acumen to sell before it pops will make boatloads, but the vast majority will lose.
        thereare5lights 6y ago
        You're not addressing the point, which is even if they get investigated and get penalties, those penalties are likely to be peanuts compared to what they stand to gain by lying. When was the last time the SEC sent anyone from these hedge funds to jail? When was the last time they imposed penalties that actually hurt?

Melvin capital [claimed to have] exited the short position two days ago, the loss is realized.

by timack 6y ago

Melvin capital [claimed to have] exited the short position two days ago, the loss is realized.

It was a company announcement material to the fund's prospects, if they lied it would be grounds for a securities fraud suit from their investors.

thereare5lights 6y ago
Do we know if the fine that they would get is smaller or larger than the amount they stand to save by lying?
- ivalm 6y ago
  But there is no reason to think they are lying. They needed $3b to close, they got 2.85b cash bailout, it makes sense that they closed.
  - thereare5lights 6y ago
    The reason is if they can make more money by lying. If still make a net profit even after any penalties for lying, then why wouldn't they lie? It's not like wall street has shown itself to be upstanding actors.
    - ivalm 6y ago
      Because they know this will be investigated throughly given the optics and they would be caught in fraud. The simpler explanation is that the current price point is clearly unsustainable and thus shorting GME is a crowded trade. As one fund exits another fund enters. If GME goes to $1000 people would still be shorting because, again, this price is unsustainable. It would be new people shorting though as most of the funds shorting at $300 would exit by the time it goes to $1000 (hypothetically). At the same time there is no world in which GME is worth more than $100 in 3 months, so the question now is who will be the greater fool holding the bag when it goes down. Whatever money shorts will lose now they will regain on the way down (although the short sellers losing money and making money might be different funds as some exit and some enter positions). Of course, the real money makers here are MMs that will be collecting a huge bid-ask spread on both directions. I don't think there is much good news for the retail investors though. As with all bubbles the people who got in early and had the acumen to sell before it pops will make boatloads, but the vast majority will lose.
      - thereare5lights 6y ago
        You're not addressing the point, which is even if they get investigated and get penalties, those penalties are likely to be peanuts compared to what they stand to gain by lying. When was the last time the SEC sent anyone from these hedge funds to jail? When was the last time they imposed penalties that actually hurt?