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Buying GME is in fact not linked to destroying a hedge fund as the funds with large concentrated short positions exited the investment several days ago. The sit

Buying GME is in fact not linked to destroying a hedge fund as the funds with large concentrated short positions exited the investment several days ago. The situation now is a bonanza for billionaires, as many have gone long the stock or are providing highly lucrative retail options market making services. The entire narrative about gme now being some sort of populist uprising is a sham perpetuated by those who want to bring fresh bag holders into the name.

dualthro 6y ago
How come I continue to see posts talking about the short float for GME being in excess of 100%? disclosure: I have no investment in GME, but am hoping to see some hedge funds suffer
- xadhominemx 6y ago
  It probably is over 100%. That’s unusually high but 100% short interest is not some sort of special number. Shorting works by borrowing a share and selling it to someone else. There’s no reason the same share could not be borrowed multiple times, as the shares are all fungible.
  - midasuni 6y ago
    So if two people owned one share, they could simply pass it between each other until their shorts are covered?
    - ScoutOrgo 6y ago
      Not passed, but bought since the underlying price will have changed.
    - treis 6y ago
      Not exactly, but yes. A single share can theoretically unwind all of these short positions. If we have A lends to B who sells to C who lends to D who sells to E who lends to F who sells to G. The reverse of the process will unwind it: G sells to F who returns to E who sells to D who returns to C who sells to B who returns to A
      - bluGill 6y ago
        It doesn't even have to be reverse. It can be G sells to C who sells to F->A->E->B->D just to make up a random order.
  - kybernetikos 6y ago
    Sure, but when you short, you owe a share. If more people owe shares than there are shares for sale, you have a serious supply and demand problem depending on when those debts come due. If shorts are significantly over 100% of float, then it would seem that they are still vulnerable to further squeezing. Further shorting is completely possible - nothing stops shares continuing to be lent, but doing so just makes the likely supply shortfall worse.
    - threedots 6y ago
      The supply of shares for covering is not constrained by the number of actual shares in issue in the ordinary course of trading (you can create this condition artificially if you want to but people usually don't). There can always be more shares created for short sellers to cover with through shorting itself. Short squeezes are usually not about supply constraints, they are about forced buying caused by margin requirements. High short interest just indicates a lot of potential forced buyers in the event of a price spike. Except in special cases there is particular magic to having 100% of the float on loan except that this is a high number which suggests many potential forced buyers under the right circumstances.
  - tonyarkles 6y ago
    From what I understand, it is a slightly special number. Each one of those shorts is supposed to have some kind of contract in place that can be used to cover the position (e.g. a call option that would ensure that the stock could be purchased, even if the options contract isn't ITM). If there's over 100% short interest, then it's impossible for all of the outstanding shorts to be covered in that way (or, alternatively, the contracts to cover the short positions are naked, not the shorts themselves). I'm by no means a finance guy and if I've misunderstood this, I'm happy to be corrected.
    - TeMPOraL 6y ago
      (Disclaimer: my expertise on the stock market extends to knowing how to spell "stonks".) I posted a chain analogy elsewhere[0]. My understanding is that short interest being > 100% just means that the average length of the "short-lend" chain is greater than 1 "short-lend" pair. I don't think that such a chain is anything special - just that getting rid of the earlier short in the chain requires getting rid of the latter short in the chain first. -- [0] - https://news.ycombinator.com/item?id=25956325 https://news.ycombinator.com/item?id=25956325
    - bluGill 6y ago
      That doesn't matter because nobody covers the stock at the same time. The shorts buy back a few stocks, return it, then a bit later buy it back again from someone else who sees the higher price and decides to cash out. Neither of the two owners above knows that that they both technically owned the exact same stock. Most stocks are head by the broker who combines them all into one listing of total number of stocks owned. This is all electronic, nobody ever worries about the actual stock behind it. When the company sends out a shareholder mailing they just give the company all the addresses, not how many shares anyone has. (I'm not sure how voting is handled!) Note that there is a loophole above. It is possible to get the physical stocks personally instead of letting your broker handle it. This can force a short squeeze as your broker will be forced to unwind everything far enough to find real shares for you, and if required will force one of the shorts to buy back shares on the market. This has happened a few times in history, but few people have the means or inclination to pull it off (and it isn't what is happening here).
- sneeze-slayer 6y ago
  Matt Levine gave a pretty good explanation a few days ago how short interest can be greater than 100% of float in his newsletter Money Stuff: https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops?sref=1kJVNqnU#footnote-3 https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...
TeMPOraL 6y ago
The loudest opinion on WSB currently is that the hedge funds didn't actually exit their shorts, but are lying about this, and, well, quoting from a random WSB post: "They didn’t exit any of their short positions! You can look it up!!! The fund sold their shares to other funds, which made the stock algorithm think the stock is being sold —> price goes down —> the found that bought sells those shares again to the fund that sold them in the first place —> price drops even more —> they keep doing that —> price drops lower every time —> but as long as we hold they weren’t able to exit any positions!!! Shorts are still up 120% percent. As long as we hold the squeeze is inevitable!! And if you don’t believe me, look at the GME after hour stock price!" https://old.reddit.com/r/wallstreetbets/comments/l7oobr/42069_at_premarket_sign_from_the_stonk_gods/gl83no5/ https://old.reddit.com/r/wallstreetbets/comments/l7oobr/4206... Whether that's true or are they just driving themselves off a cliff? I don't know.
- xadhominemx 6y ago
  I’m sure some funds are still short GME but with small position sizes so they can absorb temporary losses. No way any large fund still has a concentrated short.
- hollowcelery 6y ago
  > Shorts are still up 120% percent This doesn't mean that the original funds didn't exit the positions. It's likely that there are many new participants who are taking short positions in the last few days because the stock is obviously overvalued.
- threedots 6y ago
  I don't understand why people think Melvin would do this. Sure they might be prepared to flout SEC rules if they thought they could get away with it but whether they sold is trivially verifiable and they would be guaranteed to get caught. Exiting the position was probably also a precondition of the new investors putting money in. The comment you pasted is incoherent rambling. It's honestly like something from a qanon forum. Even ignoring that prices don't work how they seem to think the mechanism they suggest for manipulating them doesn't make sense (it would also be very illegal and again trivial to verify for the SEC).

dualthro 6y ago

How come I continue to see posts talking about the short float for GME being in excess of 100%? disclosure: I have no investment in GME, but am hoping to see some hedge funds suffer

xadhominemx 6y ago
It probably is over 100%. That’s unusually high but 100% short interest is not some sort of special number. Shorting works by borrowing a share and selling it to someone else. There’s no reason the same share could not be borrowed multiple times, as the shares are all fungible.
- midasuni 6y ago
  So if two people owned one share, they could simply pass it between each other until their shorts are covered?
  - ScoutOrgo 6y ago
    Not passed, but bought since the underlying price will have changed.
  - treis 6y ago
    Not exactly, but yes. A single share can theoretically unwind all of these short positions. If we have A lends to B who sells to C who lends to D who sells to E who lends to F who sells to G. The reverse of the process will unwind it: G sells to F who returns to E who sells to D who returns to C who sells to B who returns to A
    - bluGill 6y ago
      It doesn't even have to be reverse. It can be G sells to C who sells to F->A->E->B->D just to make up a random order.
- kybernetikos 6y ago
  Sure, but when you short, you owe a share. If more people owe shares than there are shares for sale, you have a serious supply and demand problem depending on when those debts come due. If shorts are significantly over 100% of float, then it would seem that they are still vulnerable to further squeezing. Further shorting is completely possible - nothing stops shares continuing to be lent, but doing so just makes the likely supply shortfall worse.
  - threedots 6y ago
    The supply of shares for covering is not constrained by the number of actual shares in issue in the ordinary course of trading (you can create this condition artificially if you want to but people usually don't). There can always be more shares created for short sellers to cover with through shorting itself. Short squeezes are usually not about supply constraints, they are about forced buying caused by margin requirements. High short interest just indicates a lot of potential forced buyers in the event of a price spike. Except in special cases there is particular magic to having 100% of the float on loan except that this is a high number which suggests many potential forced buyers under the right circumstances.
- tonyarkles 6y ago
  From what I understand, it is a slightly special number. Each one of those shorts is supposed to have some kind of contract in place that can be used to cover the position (e.g. a call option that would ensure that the stock could be purchased, even if the options contract isn't ITM). If there's over 100% short interest, then it's impossible for all of the outstanding shorts to be covered in that way (or, alternatively, the contracts to cover the short positions are naked, not the shorts themselves). I'm by no means a finance guy and if I've misunderstood this, I'm happy to be corrected.
  - TeMPOraL 6y ago
    (Disclaimer: my expertise on the stock market extends to knowing how to spell "stonks".) I posted a chain analogy elsewhere[0]. My understanding is that short interest being > 100% just means that the average length of the "short-lend" chain is greater than 1 "short-lend" pair. I don't think that such a chain is anything special - just that getting rid of the earlier short in the chain requires getting rid of the latter short in the chain first. -- [0] - https://news.ycombinator.com/item?id=25956325 https://news.ycombinator.com/item?id=25956325
  - bluGill 6y ago
    That doesn't matter because nobody covers the stock at the same time. The shorts buy back a few stocks, return it, then a bit later buy it back again from someone else who sees the higher price and decides to cash out. Neither of the two owners above knows that that they both technically owned the exact same stock. Most stocks are head by the broker who combines them all into one listing of total number of stocks owned. This is all electronic, nobody ever worries about the actual stock behind it. When the company sends out a shareholder mailing they just give the company all the addresses, not how many shares anyone has. (I'm not sure how voting is handled!) Note that there is a loophole above. It is possible to get the physical stocks personally instead of letting your broker handle it. This can force a short squeeze as your broker will be forced to unwind everything far enough to find real shares for you, and if required will force one of the shorts to buy back shares on the market. This has happened a few times in history, but few people have the means or inclination to pull it off (and it isn't what is happening here).
sneeze-slayer 6y ago
Matt Levine gave a pretty good explanation a few days ago how short interest can be greater than 100% of float in his newsletter Money Stuff: https://www.bloomberg.com/opinion/articles/2021-01-25/the-game-never-stops?sref=1kJVNqnU#footnote-3 https://www.bloomberg.com/opinion/articles/2021-01-25/the-ga...

TeMPOraL 6y ago

The loudest opinion on WSB currently is that the hedge funds didn't actually exit their shorts, but are lying about this, and, well, quoting from a random WSB post: "They didn’t exit any of their short positions! You can look it up!!! The fund sold their shares to other funds, which made the stock algorithm think the stock is being sold —> price goes down —> the found that bought sells those shares again to the fund that sold them in the first place —> price drops even more —> they keep doing that —> price drops lower every time —> but as long as we hold they weren’t able to exit any positions!!! Shorts are still up 120% percent. As long as we hold the squeeze is inevitable!! And if you don’t believe me, look at the GME after hour stock price!" https://old.reddit.com/r/wallstreetbets/comments/l7oobr/42069_at_premarket_sign_from_the_stonk_gods/gl83no5/ https://old.reddit.com/r/wallstreetbets/comments/l7oobr/4206... Whether that's true or are they just driving themselves off a cliff? I don't know.

xadhominemx 6y ago
I’m sure some funds are still short GME but with small position sizes so they can absorb temporary losses. No way any large fund still has a concentrated short.
hollowcelery 6y ago
> Shorts are still up 120% percent This doesn't mean that the original funds didn't exit the positions. It's likely that there are many new participants who are taking short positions in the last few days because the stock is obviously overvalued.
threedots 6y ago
I don't understand why people think Melvin would do this. Sure they might be prepared to flout SEC rules if they thought they could get away with it but whether they sold is trivially verifiable and they would be guaranteed to get caught. Exiting the position was probably also a precondition of the new investors putting money in. The comment you pasted is incoherent rambling. It's honestly like something from a qanon forum. Even ignoring that prices don't work how they seem to think the mechanism they suggest for manipulating them doesn't make sense (it would also be very illegal and again trivial to verify for the SEC).