5 ms·

It's really strange. Why would they openly announce that they have closed shorts and that they are sustaining damage so publicly? My theory is that they are no

by f430 6y ago

It's really strange. Why would they openly announce that they have closed shorts and that they are sustaining damage so publicly? My theory is that they are not only doubling down but quadrupling down everytime the stock shoots up. Gamestop has no fundamentals going for it, take a look at its other competitors in the industry, they are all gone. Neither do cases for AMC (who themselves acknowledged and WARNED investors that their operations are simply no long viable due to the pandemic). This is probably a once in a lifetime short, they've seen the order flows from Robinhood, they have probably infiltrated r/wallstreetbets and are egging people to buy in to the "David vs Goliath" narrative which is couldn't be further removed from the truth. Many people who are jumping in now (from all the posts asking what is a margin, or when do I sell, or even how to use a broker app) and I fear that people are walking into a clever trap setup by the hedge funds that are short. There is also a lot of institutional money on the long side and they also have interest in continuing the political narrative because they need somebody to hold the bags. Remember that exuberance of the irrational variety of the 2000s craze, the departure from fundamentals and the mania of the public jumping in while the smart money were happily selling to the eager investing amateur. We have no way of knowing if people posting gains on wsb are doing it on paper accounts or not.

fractionalhare 6y ago
> My theory is that they are not only doubling down but quadrupling down everytime the stock shoots up. They would not have survived Monday, Tuesday or Wednesday if they doubled down once instead of closing out, let alone if they did it on every significant increase. Even if you cite the investment from Point72 and Citadel: that's a fraction of what they'd have needed to survive the stock going from $100 to $300+.
- djeiasbsbo 6y ago
  They could have. If they shorted again on tuesday at >300 they could have made a lot of money by covering the next day when the price dropped due to the buy restrictions. At one point in the aftermarket the stock even hit 500$ and the next day went back down to 190$. That is potwntially a lot of money for the right short positions.
  - fractionalhare 6y ago
    This is extremely unlikely. I'm saying they wouldn't have survived to see $300. You think they managed to live long enough to short at the top tick without being margin called and having their prime broker pull the plug on them? The doubt around this situation is uncritical. This is a firm motivated by money. If you're seriously interested in making money, you don't lie to the public about closing your positions (boom, securities fraud) and stay in it when the volatility of the thing has destroyed your thesis (boom, breaking fiduciary duty). You get out to trade another day.
  - bedhead 6y ago
    This is dead wrong. Melvin got a margin call from their prime broker, which is why they needed to get bailed out abruptly by Griffin and Cohen. The mid-month injection shows how dire it was and how margin calls work. Hedge funds like Melvin typically use monthly accounting, so typically you can only add/withdraw capital for the first of the month. But margin calls are fire drills, all the sudden you get a phone call saying, "We need another $3 billion in equity or we liquidate your account" and you either sell stocks like mad (though even in this case I don't think it was an option) or pray you have a white knight sugar daddy like Griffin/Cohen to write a check literally overnight. Melvin had no choice but to cover, they couldn't start doubling down it doesn't work that way, they'd be done, and actually some of these stocks like GME were so volatile that it might even eat into the prime (but really the clearing broker).
    - bluGill 6y ago
      How much does Melvin have? Margin calls are about total value vs short value. If gme was only a small percentage of their shorts at the start they could be well under the 50% capital requirements to not get a margin call. Hedge funds often don't diversify, but they still know the value in it. Though I tend to agree with those who conclude that they wouldn't risk lieing in their public statements.
      - f430 6y ago
        They have potentially unlimited source of funds at disposal from their parent hedge fund. They often don't shut down especially when they have better information than the public. They can eat the cost of getting the timing wrong if it means they stand to make a killing which they are poised to do as average retail traders are simply transferring wealth to the pockets of executives and hedge fund managers while thinking they are actually socking it to the big man. Eventually the stream comes to a stop, a large dip or people cashing out signals an end and a group of retailers who didn't know that they were being pumped are caught holding the bags. I am now reading on r/wallstreetbets that $30,000/share makes perfect sense and it had like 24k upvotes. This is the type of insanity gripping the subreddit. Now even people who don't even use reddit are asking me how they can buy GME. This is textbook peak bubble even as we are consistently seeing red days across the board.
- f430 6y ago
  I guess what I mean is that they are slowly increasing their short positions like when (allegedly) short positions increased on the day when trading disallowed on several broker accounts. More recently are weird stuff going on on r/wallstreetbets where award spamming on relatively unknown stocks with suspicious upvote activities were being called out which suggests that the hedge funds have realized the huge potential of influencing what makes it on the first page. I really think its irresponsible people continuing to paint this as us vs them, when in reality the people that will be victimized are the ones that will have bought into the narrative to realize nobody wants to buy GME or AMC at the ridiculous prices. We are seeing a weird FOMO based on politics not dissimilar to the "evil fiat feds vs crypto" narrative.
mattkrause 6y ago
Was AMC in trouble before the pandemic?
- kortilla 6y ago
  Yeah, it was like $6 a share at the start of 2020 down from $20 a year before that.
ClumsyPilot 6y ago
"My theory is that they are not only doubling down but quadrupling down everytime the stock shoots up. " You can do the same at a casino - double your bets every time you loose. The technique works, 100%. The trouble is, it requires exponential amounts of money. "We have no way of knowing if people posting gains on wsb are doing it on paper accounts or not." That's starting to sound a lot like "moon landing was faked"
- nradov 6y ago
  That technique doesn't work at the casino. Even if you had a huge amount of capital the house still has a slight edge so if you keep playing long enough you'll eventually lose everything.
  - esyir 6y ago
    It does, but as he said, only under ideal conditions. I.e.: No limits to bets and infinite base money. Both of which clearly don't exist.
  - dghlsakjg 6y ago
    The technique works very well at the casino under the right conditions. So much so that casino workers know to look for it, and to boot you. If you play it as an infinite game as you imply, you WILL lose. If you make it a finite game, you can win. Here's what it takes to work 1.You have to remain liquid long enough to hit a win. It doesn't take many doublings to break yourself. 2. You have to end the game at the right time. The side that chooses when to end the game is, almost certainly, the one that will win. This is why casinos will give you the boot when they realize that you are doing it BEFORE you have a chance to go up.

by f430 6y ago

fractionalhare 6y ago

> My theory is that they are not only doubling down but quadrupling down everytime the stock shoots up. They would not have survived Monday, Tuesday or Wednesday if they doubled down once instead of closing out, let alone if they did it on every significant increase. Even if you cite the investment from Point72 and Citadel: that's a fraction of what they'd have needed to survive the stock going from $100 to $300+.

djeiasbsbo 6y ago
They could have. If they shorted again on tuesday at >300 they could have made a lot of money by covering the next day when the price dropped due to the buy restrictions. At one point in the aftermarket the stock even hit 500$ and the next day went back down to 190$. That is potwntially a lot of money for the right short positions.
- fractionalhare 6y ago
  This is extremely unlikely. I'm saying they wouldn't have survived to see $300. You think they managed to live long enough to short at the top tick without being margin called and having their prime broker pull the plug on them? The doubt around this situation is uncritical. This is a firm motivated by money. If you're seriously interested in making money, you don't lie to the public about closing your positions (boom, securities fraud) and stay in it when the volatility of the thing has destroyed your thesis (boom, breaking fiduciary duty). You get out to trade another day.
- bedhead 6y ago
  This is dead wrong. Melvin got a margin call from their prime broker, which is why they needed to get bailed out abruptly by Griffin and Cohen. The mid-month injection shows how dire it was and how margin calls work. Hedge funds like Melvin typically use monthly accounting, so typically you can only add/withdraw capital for the first of the month. But margin calls are fire drills, all the sudden you get a phone call saying, "We need another $3 billion in equity or we liquidate your account" and you either sell stocks like mad (though even in this case I don't think it was an option) or pray you have a white knight sugar daddy like Griffin/Cohen to write a check literally overnight. Melvin had no choice but to cover, they couldn't start doubling down it doesn't work that way, they'd be done, and actually some of these stocks like GME were so volatile that it might even eat into the prime (but really the clearing broker).
  - bluGill 6y ago
    How much does Melvin have? Margin calls are about total value vs short value. If gme was only a small percentage of their shorts at the start they could be well under the 50% capital requirements to not get a margin call. Hedge funds often don't diversify, but they still know the value in it. Though I tend to agree with those who conclude that they wouldn't risk lieing in their public statements.
    - f430 6y ago
      They have potentially unlimited source of funds at disposal from their parent hedge fund. They often don't shut down especially when they have better information than the public. They can eat the cost of getting the timing wrong if it means they stand to make a killing which they are poised to do as average retail traders are simply transferring wealth to the pockets of executives and hedge fund managers while thinking they are actually socking it to the big man. Eventually the stream comes to a stop, a large dip or people cashing out signals an end and a group of retailers who didn't know that they were being pumped are caught holding the bags. I am now reading on r/wallstreetbets that $30,000/share makes perfect sense and it had like 24k upvotes. This is the type of insanity gripping the subreddit. Now even people who don't even use reddit are asking me how they can buy GME. This is textbook peak bubble even as we are consistently seeing red days across the board.
f430 6y ago
I guess what I mean is that they are slowly increasing their short positions like when (allegedly) short positions increased on the day when trading disallowed on several broker accounts. More recently are weird stuff going on on r/wallstreetbets where award spamming on relatively unknown stocks with suspicious upvote activities were being called out which suggests that the hedge funds have realized the huge potential of influencing what makes it on the first page. I really think its irresponsible people continuing to paint this as us vs them, when in reality the people that will be victimized are the ones that will have bought into the narrative to realize nobody wants to buy GME or AMC at the ridiculous prices. We are seeing a weird FOMO based on politics not dissimilar to the "evil fiat feds vs crypto" narrative.

mattkrause 6y ago

Was AMC in trouble before the pandemic?

kortilla 6y ago
Yeah, it was like $6 a share at the start of 2020 down from $20 a year before that.

ClumsyPilot 6y ago

"My theory is that they are not only doubling down but quadrupling down everytime the stock shoots up. " You can do the same at a casino - double your bets every time you loose. The technique works, 100%. The trouble is, it requires exponential amounts of money. "We have no way of knowing if people posting gains on wsb are doing it on paper accounts or not." That's starting to sound a lot like "moon landing was faked"

nradov 6y ago
That technique doesn't work at the casino. Even if you had a huge amount of capital the house still has a slight edge so if you keep playing long enough you'll eventually lose everything.
- esyir 6y ago
  It does, but as he said, only under ideal conditions. I.e.: No limits to bets and infinite base money. Both of which clearly don't exist.
- dghlsakjg 6y ago
  The technique works very well at the casino under the right conditions. So much so that casino workers know to look for it, and to boot you. If you play it as an infinite game as you imply, you WILL lose. If you make it a finite game, you can win. Here's what it takes to work 1.You have to remain liquid long enough to hit a win. It doesn't take many doublings to break yourself. 2. You have to end the game at the right time. The side that chooses when to end the game is, almost certainly, the one that will win. This is why casinos will give you the boot when they realize that you are doing it BEFORE you have a chance to go up.