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Would love it if someone would write a detailed article addressing the conspiracy Melvin Capital (and others) not exiting their short position. Melvin Capital

Would love it if someone would write a detailed article addressing the conspiracy Melvin Capital (and others) not exiting their short position. Melvin Capital says they did, yet the sentiment on virtually all of reddit (not just /r/WSB) is they didn't. I haven't found really anything to support reddit's conclusion.

stu2b50 6y ago
There wouldn't be much to write about. Hedge Funds are not required to disclose their short positions in the US, so no one really knew how many shorts they had and of what kind, and no one knows if they did indeed close them. Reddit was speculating based on the lack of a reduction in short interest. However, it's hard to determine because a) you don't know how many shorts Melvin had b) you don't know how many new short positions were created that day
- totalZero 6y ago
  also (c) short interest is not a real-time computation.
nprz 6y ago
Also trying to understand this. According to S3[0] many short positions are still open, but it is unclear if these are the original shorts, or new if new shorts were opened at the higher price point. In other news, Melvin Capital is down 53%[1] [0]https://twitter.com/ihors3/status/1355246955874701314 https://twitter.com/ihors3/status/1355246955874701314 [1]https://www.wsj.com/articles/melvin-capital-lost-53-in-january-hurt-by-gamestop-and-other-bets-11612103117 https://www.wsj.com/articles/melvin-capital-lost-53-in-janua...
- jahlove 6y ago
  thanks for the links. I guess I can't understand that S3 chart at all, because it looks to me like the "SI Shares" have dropped precipitously in the last couple days.
  - nprz 6y ago
    Yeah, it's a little confusing, SI is on the left. It's dropped from 70m to 58m in the past month, but 58m is still above the float @ 49.6m [0] [0]https://www.reddit.com/r/wallstreetbets/comments/ip6jnv/the_real_greatest_short_burn_of_the_century/ https://www.reddit.com/r/wallstreetbets/comments/ip6jnv/the_...
  - deleted 6y ago
    [deleted]
cccc4all 6y ago
Melvin Capital claimed they exited all short positions, yet there weren’t any significant change in short %. By all accounts, they had huge percentage of shorts, so them covering shorts should have dropped short % down below 100%. It sounded too much like a PR move to convince WSB that short squeeze was over. Would Melvin Capital lie about short positions to save $billions of dollars? Melvin Capital initially claimed their short losses were 30%, now they are claiming short losses over 50%. How are they still losing money on shorts?
Aunche 6y ago
I'm just a finance enthusiast, so take what I say with a grain of salt. Now that GME is clearly overvalued, that makes the shorting even more expensive. The borrow fees that Melvin capital owes for their shorts are less than the current ones (iirc ~25% vs ~50%). If you're a hedge fund that wants to make money to short GME, it would make sense to buy the shorts off Melvin rather than the public market. Melvin itself does not have the liquidity to maintain these shorts, but Point 72 and Citadel likely do.
deleted 6y ago
[deleted]

stu2b50 6y ago

There wouldn't be much to write about. Hedge Funds are not required to disclose their short positions in the US, so no one really knew how many shorts they had and of what kind, and no one knows if they did indeed close them. Reddit was speculating based on the lack of a reduction in short interest. However, it's hard to determine because a) you don't know how many shorts Melvin had b) you don't know how many new short positions were created that day

totalZero 6y ago
also (c) short interest is not a real-time computation.

nprz 6y ago

Also trying to understand this. According to S3[0] many short positions are still open, but it is unclear if these are the original shorts, or new if new shorts were opened at the higher price point. In other news, Melvin Capital is down 53%[1] [0]https://twitter.com/ihors3/status/1355246955874701314 https://twitter.com/ihors3/status/1355246955874701314 [1]https://www.wsj.com/articles/melvin-capital-lost-53-in-january-hurt-by-gamestop-and-other-bets-11612103117 https://www.wsj.com/articles/melvin-capital-lost-53-in-janua...

jahlove 6y ago
thanks for the links. I guess I can't understand that S3 chart at all, because it looks to me like the "SI Shares" have dropped precipitously in the last couple days.
- nprz 6y ago
  Yeah, it's a little confusing, SI is on the left. It's dropped from 70m to 58m in the past month, but 58m is still above the float @ 49.6m [0] [0]https://www.reddit.com/r/wallstreetbets/comments/ip6jnv/the_real_greatest_short_burn_of_the_century/ https://www.reddit.com/r/wallstreetbets/comments/ip6jnv/the_...
- deleted 6y ago
  [deleted]

cccc4all 6y ago

Melvin Capital claimed they exited all short positions, yet there weren’t any significant change in short %. By all accounts, they had huge percentage of shorts, so them covering shorts should have dropped short % down below 100%. It sounded too much like a PR move to convince WSB that short squeeze was over. Would Melvin Capital lie about short positions to save $billions of dollars? Melvin Capital initially claimed their short losses were 30%, now they are claiming short losses over 50%. How are they still losing money on shorts?

Aunche 6y ago

I'm just a finance enthusiast, so take what I say with a grain of salt. Now that GME is clearly overvalued, that makes the shorting even more expensive. The borrow fees that Melvin capital owes for their shorts are less than the current ones (iirc ~25% vs ~50%). If you're a hedge fund that wants to make money to short GME, it would make sense to buy the shorts off Melvin rather than the public market. Melvin itself does not have the liquidity to maintain these shorts, but Point 72 and Citadel likely do.

deleted 6y ago

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