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Everything posted by Eastwood
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Massive shorting results in lowered share price, which leads to lowered market cap, which affects not only the company's debt on the books by possibly changing interest rates and possibly causing acceleration, it affects the company's ability to borrow in the future. Without the ability to borrow, already struggling companies lose the ability to try to extend the amount of time they have to make the necessary changes to survive. If we want to talk about valuation, GME's cash on hand, plus assets, led to a fair market value of around $10 - $12 per share. Sure, market sentiment that the company was a loser could have suppressed the price down to the $4 level, but the presence of 140% short float is a very good indicator that the share price was artificially depressed. Additionally, GME unloaded a ton of older inventory and increased their cash reserves, which was then used to pay off an entire half of their outstanding debt that was coming due in 2021, which put them in a better position to negotiate better financing in the future. Then Cohen bought 9.8% of the company and the price STILL didn't make it out of single digits. If that isn't an artificially depressed share price, I don't know what is.
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Give TD Ameritrade a try. They'll give you a paper account for free for 30 days.
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It tells you exactly how many shares they own, how much the position has changed since the last reporting, as well as call and put volume. What it doesn't show, however, is shares shorted.
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This. You can google a hedge fund's 13f and look at what they have. But there is a huge delay. For example, Melvin's 13F was filed in November and covered their holdings as of 09/20/2020. A lot can change in that period of time.
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Never forget that Wall Street chummed the waters with high short floats then blamed the sharks for showing up.
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Without retail investors to sell their shares, short positions would have to rely on institutions and insider ownership for shares.
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It was quite a surprise when I saw that pop up to the top. I truly am flattered and somewhat shocked/humbled by the response the post got. I'm still kind of in shock that I'm on the sidelines now. Again, thank you all for the kind words, stay safe, and Hook'em.
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I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the length because this post is me spiking the football and other than banter about the moves GME makes in the future, this is the last time I ever dig into the fundamentals of the GME trade. What we saw today was covering either due to what is called a gamma squeeze or a short squeeze. Maybe a mix of both. We won't really know until later, possibly at the end of close Wednesday when brokerages like TD update their short interest. A gamma squeeze occurs as the price moves up, crossing the thresholds of strike prices of calls that will soon be expiring. Market Makers use the Delta of an option to determine how many shares of a stock they should purchase in preparation of possibly covering the calls when they are exercised, either by the buyer of the call or upon expiring in the money. As the share price goes up, combined with the days getting closer to expiry, up goes the Delta, up goes the amount of shares the MMs buy. Last Friday, every call on the board for GME was in the money at expiry. I'll repeat: EVERY CALL ON THE BOARD WAS ITM AT EXPIRY. I don't know if that's ever happened in the history of the market. That means that if every call was exercised, 11.7 million shares would need to be transferred over to the new owners today and tomorrow. Now, as the Delta on a lot of the lower strikes were already at 1 and the shares already (hopefully for the call seller) purchased, it shouldn't be a big deal. However, the big pop happened ON Friday, not before. That caused a mad scramble in the after hours Friday, today, and possibly tomorrow for those who are gambling on the price decreasing further before they fill those calls. So, that's a gamma squeeze. Price creeps up, MMs who sell calls end up buying shares to cover, causing the price to climb higher, and then creating essentially a feedback loop spiking the price when combined with buying from retail or pops on positive news. What is happening, and may continue to happen, is the result of hedge funds and possibly Bank of America rampantly shorting GME over the course of a year hoping that it goes zero and they then get to pocket everything and give nothing back. The short float on December 31st was 140% and the institutional ownership was 117%. But how is such a thing possible? They borrowed shares to either 1.) sell, never intending to buy them back and return them because they were hell bent on bankrupting GME, or 2.) lent out those already borrowed shares that they never intended to give back anyway to collect the premium, creating a borrowed share of a borrowed share. They would also buy dips incrementally, amassing large positions, sell calls and buy puts with a quick expiry, then dump all of the shares they accumulated at once while simultaneously shorting to tank the price and pocket the premiums on the options they bought and sold. Then, when that wasn't enough, they sold naked shorts. They sold shares they didn't even have or even exist. They injected "synthetic shares" into the market. Synthetic, fugazi, fogazi. It's a wazi, it's a woozi. They're fairy dust. They don't exist. They're not fucking real. But the people and institutional investors they sold them to bought the right to own the shares. And those banks and hedge funds are obligated to deliver them. But now there aren't enough shares to go around. There's an infinite demand for shares, but a finite supply. In a total share recall event, the lenders of the shorted shares could recall every share on borrow and still be 21 MILLION shares short of demand. The banks and hedge funds that created that SHOULD be on the hook. It SHOULD be illegal. Think of how depressed the price was because of it. Think of the loss of market cap, which led to lowered credit ratings, which led to higher interest rates and less borrowing power, and the layoffs and store closures that followed. Awful. The price should go to infinity because the demand the banks and hedge funds created will become infinity. Boomers can bitch and moan about RH and college kids dumping their stimmy into GME all they want, but the reality is that a bunch of boomer bankers and hedge funds created a situation that should be legally, economically, and financially impossible. Boomers want to call what retail investors are doing "market manipulation." However, anyone who dug into the situation enough saw the writing on the wall. Honest to goodness due diligence combined with simple supply/demand economics combined with paying attention to the new market trend of retail investors told anyone interested all they needed to know. This was me back in September: The price hadn't even hit $10, yet, when I said that. The house of cards had already been built. A fan had been placed in front of it. And everyone told me that I was crazy for thinking the house of cards would fall over. It wasn't a secret. It was in plain fucking sight. And we are finding out it is everywhere. Wall Street and old guys in banking and finance can harumph all they want about how a bunch of dumb wage earners are gaming their system to make a buck, but I think the reality is that the curtain has started getting pulled back on Old Man Oz. Take me, for example. I've given a detailed breakdown and have proof in this very thread that I had produced this investment thesis MONTHS before it was mainstream and materialized. I gave my credentials above. Want to know how long I've been actively investing? Since March. Same as all the Robinhood punks. All it takes for a large chunk of the population to be competent in anything is 1. Time 2. Education/training, and 3. Financial resources. In March, there was the perfect storm of 1. COVID lockdowns, 2. The internet and educational resources on the various trading platforms, and 3. Stimulus - The ultimate Other People's Money. Millions of $3k hedge funds popped up all over the nation and had the time, education, and money to be just dangerous enough. I traded in a paper account on Think Or Swim for 30 days and was then off to the races. I developed a momentum trading strategy where I combined candlestick patterns, moving average patterns, the RSI, and the Elliot Wave. Not only that, I also voraciously consumed anything I could get my hands on about market history, valuations, and trends. I bought and sold stocks, bought options, and sold covered calls and generated a 10% return over the course of about a month. Then I stumbled on GME, halted all active trading, liquidated any outstanding options, sat on my KO, XOM, and PFE (which was my worst trade) shares and positioned myself into GME. My return is now over 1000%. Either I'm some kind of wonder boy who picked all this up quickly because I'm a high functioning autistic person... Or maybe this shit just ain't as hard as Wall Street wants us to think it is. And maybe Wall Street was so habitually comfortable with how little people knew about their industry in the past that they didn't even bother concealing their moves because they didn't think retail investors would know how to play the other side. Well, the secret's out. This new batch of retail investors spent the last decade learning how to min/max various economic systems in video games. They are accustomed to dumping hours of time learning how to maximize returns on digital assets. They went from watching hours of YouTube videos on how to mine diamonds and make a Fortune 3 pick axe in Minecraft to watching hours of how to turn a couple grand into 5 figures. In some cases, 6 or 7 figures. As I stated earlier, I sold half of my position in GME today, but I still firmly believe in the trade I executed. I am now concerned about two things, one being specific to GME. I think the invisible hand of the free market is about to get absolutely doomfisted by either the government or big banks. I think a lot of institutions out there are shook. When GME hit $150 and other short squeezes were popping, a huge market sell-off occurred. I think funds were liquidating to cover their losses because margin calls were going out. In GME alone today, short sellers lost $1.6 billion according to Business Insider. Melvin Capital, supposedly the biggest short seller of GME out there, is down a whopping 30% for 2021, so far. They manage billions. We learned in 2008 that these banks and funds actually interweave into a structural support for the entire financial system. If a multi-billion dollar part of that support structure fails, it increases the strain on the others, and then another fails, and then we have a cascade failure. I think GME and the big shorts come together and negotiate a share purchase of newly issued shares under the condition that they are immediately transferred to the rightful owners to get the short float below 100%. This is actually extremely bullish for GME. They erase their remaining debt, buy out of all of their bad leases, and increase their cash long enough for the turn around. That's why I only sold half of my position. I'm long GME. In Ryan Cohen I trust. But I also think the government steps in and does something to try to fix the rest of the market. As history has shown us, this doesn't mean punishing the banks who created the situation in the first place. No, they're going to increase the regulations on the retail investors. That could also have grave, unintended consequences when retail cashes out all at once. So, I feel really good about today, but there may be grave consequences in future. I'll end with the cringiest thing possible: be a retail trader who uses a scene from The Big Short in one of his posts.
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I'm not a financial advisor. This is not financial advise. I don't work in finance. I do not have a degree in finance. Actually, I have a BA and I'm bad at math past Cal I. I won't apologize for the length because this post is me spiking the football and other than banter about the moves GME makes in the future, this is the last time I ever dig into the fundamentals of the GME trade. What we saw today was covering either due to what is called a gamma squeeze or a short squeeze. Maybe a mix of both. We won't really know until later, possibly at the end of close Wednesday when brokerages like TD update their short interest. A gamma squeeze occurs as the price moves up, crossing the thresholds of strike prices of calls that will soon be expiring. Market Makers use the Delta of an option to determine how many shares of a stock they should purchase in preparation of possibly covering the calls when they are exercised, either by the buyer of the call or upon expiring in the money. As the share price goes up, combined with the days getting closer to expiry, up goes the Delta, up goes the amount of shares the MMs buy. Last Friday, every call on the board for GME was in the money at expiry. I'll repeat: EVERY CALL ON THE BOARD WAS ITM AT EXPIRY. I don't know if that's ever happened in the history of the market. That means that if every call was exercised, 11.7 million shares would need to be transferred over to the new owners today and tomorrow. Now, as the Delta on a lot of the lower strikes were already at 1 and the shares already (hopefully for the call seller) purchased, it shouldn't be a big deal. However, the big pop happened ON Friday, not before. That caused a mad scramble in the after hours Friday, today, and possibly tomorrow for those who are gambling on the price decreasing further before they fill those calls. So, that's a gamma squeeze. Price creeps up, MMs who sell calls end up buying shares to cover, causing the price to climb higher, and then creating essentially a feedback loop spiking the price when combined with buying from retail or pops on positive news. What is happening, and may continue to happen, is the result of hedge funds and possibly Bank of America rampantly shorting GME over the course of a year hoping that it goes zero and they then get to pocket everything and give nothing back. The short float on December 31st was 140% and the institutional ownership was 117%. But how is such a thing possible? They borrowed shares to either 1.) sell, never intending to buy them back and return them because they were hell bent on bankrupting GME, or 2.) lent out those already borrowed shares that they never intended to give back anyway to collect the premium, creating a borrowed share of a borrowed share. They would also buy dips incrementally, amassing large positions, sell calls and buy puts with a quick expiry, then dump all of the shares they accumulated at once while simultaneously shorting to tank the price and pocket the premiums on the options they bought and sold. Then, when that wasn't enough, they sold naked shorts. They sold shares they didn't even have or even exist. They injected "synthetic shares" into the market. Synthetic, fugazi, fogazi. It's a wazi, it's a woozi. They're fairy dust. They don't exist. They're not fucking real. But the people and institutional investors they sold them to bought the right to own the shares. And those banks and hedge funds are obligated to deliver them. But now there aren't enough shares to go around. There's an infinite demand for shares, but a finite supply. In a total share recall event, the lenders of the shorted shares could recall every share on borrow and still be 21 MILLION shares short of demand. The banks and hedge funds that created that SHOULD be on the hook. It SHOULD be illegal. Think of how depressed the price was because of it. Think of the loss of market cap, which led to lowered credit ratings, which led to higher interest rates and less borrowing power, and the layoffs and store closures that followed. Awful. The price should go to infinity because the demand the banks and hedge funds created will become infinity. Boomers can bitch and moan about RH and college kids dumping their stimmy into GME all they want, but the reality is that a bunch of boomer bankers and hedge funds created a situation that should be legally, economically, and financially impossible. Boomers want to call what retail investors are doing "market manipulation." However, anyone who dug into the situation enough saw the writing on the wall. Honest to goodness due diligence combined with simple supply/demand economics combined with paying attention to the new market trend of retail investors told anyone interested all they needed to know. This was me back in September: The price hadn't even hit $10, yet, when I said that. The house of cards had already been built. A fan had been placed in front of it. And everyone told me that I was crazy for thinking the house of cards would fall over. It wasn't a secret. It was in plain fucking sight. And we are finding out it is everywhere. Wall Street and old guys in banking and finance can harumph all they want about how a bunch of dumb wage earners are gaming their system to make a buck, but I think the reality is that the curtain has started getting pulled back on Old Man Oz. Take me, for example. I've given a detailed breakdown and have proof in this very thread that I had produced this investment thesis MONTHS before it was mainstream and materialized. I gave my credentials above. Want to know how long I've been actively investing? Since March. Same as all the Robinhood punks. All it takes for a large chunk of the population to be competent in anything is 1. Time 2. Education/training, and 3. Financial resources. In March, there was the perfect storm of 1. COVID lockdowns, 2. The internet and educational resources on the various trading platforms, and 3. Stimulus - The ultimate Other People's Money. Millions of $3k hedge funds popped up all over the nation and had the time, education, and money to be just dangerous enough. I traded in a paper account on Think Or Swim for 30 days and was then off to the races. I developed a momentum trading strategy where I combined candlestick patterns, moving average patterns, the RSI, and the Elliot Wave. Not only that, I also voraciously consumed anything I could get my hands on about market history, valuations, and trends. I bought and sold stocks, bought options, and sold covered calls and generated a 10% return over the course of about a month. Then I stumbled on GME, halted all active trading, liquidated any outstanding options, sat on my KO, XOM, and PFE (which was my worst trade) shares and positioned myself into GME. My return is now over 1000%. Either I'm some kind of wonder boy who picked all this up quickly because I'm a high functioning autistic person... Or maybe this shit just ain't as hard as Wall Street wants us to think it is. And maybe Wall Street was so habitually comfortable with how little people knew about their industry in the past that they didn't even bother concealing their moves because they didn't think retail investors would know how to play the other side. Well, the secret's out. This new batch of retail investors spent the last decade learning how to min/max various economic systems in video games. They are accustomed to dumping hours of time learning how to maximize returns on digital assets. They went from watching hours of YouTube videos on how to mine diamonds and make a Fortune 3 pick axe in Minecraft to watching hours of how to turn a couple grand into 5 figures. In some cases, 6 or 7 figures. As I stated earlier, I sold half of my position in GME today, but I still firmly believe in the trade I executed. I am now concerned about two things, one being specific to GME. I think the invisible hand of the free market is about to get absolutely doomfisted by either the government or big banks. I think a lot of institutions out there are shook. When GME hit $150 and other short squeezes were popping, a huge market sell-off occurred. I think funds were liquidating to cover their losses because margin calls were going out. In GME alone today, short sellers lost $1.6 billion according to Business Insider. Melvin Capital, supposedly the biggest short seller of GME out there, is down a whopping 30% for 2021, so far. They manage billions. We learned in 2008 that these banks and funds actually interweave into a structural support for the entire financial system. If a multi-billion dollar part of that support structure fails, it increases the strain on the others, and then another fails, and then we have a cascade failure. I think GME and the big shorts come together and negotiate a share purchase of newly issued shares under the condition that they are immediately transferred to the rightful owners to get the short float below 100%. This is actually extremely bullish for GME. They erase their remaining debt, buy out of all of their bad leases, and increase their cash long enough for the turn around. That's why I only sold half of my position. I'm long GME. In Ryan Cohen I trust. But I also think the government steps in and does something to try to fix the rest of the market. As history has shown us, this doesn't mean punishing the banks who created the situation in the first place. No, they're going to increase the regulations on the retail investors. That could also have grave, unintended consequences when retail cashes out all at once. So, I feel really good about today, but there may be grave consequences in future. I'll end with the cringiest thing possible: be a retail trader who uses a scene from The Big Short in one of his posts. View full article
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Guys, the government gave you stimmy to put in the corporations' pockets, not use it to take money out of the corporations' pockets. Get with the program and stop being mean...
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My son goes out of his way to kick small rocks while we're walking in the park. No reason other than it's fun. BlackRock manages 7 trillion, with a T, and Melvin manages $20 billion and was heavily shorting some 9 figure positions of BlackRock. BlackRock kicked the shit out of that Melvin rock just because it was fun, in my opinion. But like I said last night in the Stonks thread when I first presented the theory... Could be nothing. Could be something. Interesting either way.
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Unsure. Not home to check. Googling Melvin Capital 13f and then finding the one they filed in November would have that info. Only thing is that they show put positions, not shorted shares, but I assume if they bought puts, they also shorted. That's what they did with GME and BBBY.
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I still can't believe I found the breadcrumb trail that led me to BlackRock. If I had found that 4 weeks ago, I would have easily cleared high six figures, possibly 7. GME was just the biggest fish of them, but the list on Melvin's 13f was batting almost 1.000 for short positions that had BlackRock on the other side that popped. One outlier I saw was KR, and I stopped looking there, but GME, BBBY were my first looks, then I just started going alphabetical. Spike, spike, spike. Wild.
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I'm buying back in after all the dust settles. I believe in the company with Cohen. For anyone who blames Redditors, check out FIZZ, DDS, and IRM. Not on anyone's radar. Massive price action and volume over the last 10 days. I found a pattern. Any stock Melvin shorted that had BlackRock on the other side is pumping. This was a takedown, not a retail pump and dump.
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That's why I'm out. There is no end game, IMO. This has to be fixed outside of the market and I got too nervous about what that entails for retail investors. They will always be last on the list, if on the list at all. Think of retail investors as unsecured creditors. If there's anything left, they leave you to fight over it with everyone else. This thing could shoot up another $200 today, it could plummet to the ground, it could get a 10 day SEC halt, I just don't know. As much as I love the idea of this retiring me, it's been a hard year, guys. I've been out of work since COVID locked us down, I have two kids and a mortgage... This lifted a huge weight off my shoulders and I get to treat myself and the family to a couple of nice things while leaving enough in my TDA account to hunt for the next whale. I wanted to ride this thing to the end, but at the same time, I had to do right by my family. By pushing away now, I get to do that. And now I get to watch from the sidelines and enjoy the show. Stay safe out there and Hook'em.
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https://cognitivestruggle.files.wordpress.com/2019/02/resting.gif?w=364 I sold close to today's top. And now, I rest...
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It's not the Redditors. It's an attack on Melvin Capital and other hedge funds from someone bigger than Redditors. Check out DDS, FIZZ, and IRM. All rocketing, no mention on Reddit.
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I'm still seeing the story on their website.
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Just a little list, here... Melvin's holdings at the end of September, filed in November, not sure what it is now. All short and institutional numbers from Dec. 31st: https://fintel.io/i13f/melvin-capital-management-lp/2020-09-30-0 DDS - Melvin has puts, possibly also short. BlackRock has a 3% stake. 92% institutional ownership, 30% short float - Rocketed from $70 to $105 over the last 10 days BBBY - Melvin is short. BlackRock owns a 16% stake. 117.28% institutional ownership, 66.81% short interest - Rocketed from $30 to $45, back down to $30, now appears to be slowly gamma squeezing back up to $40 over the last 5 days. FIZZ - Melvin has puts, possibly short. BlackRock has 1.7 million shares. 32.47% institutional ownership, 62.52% short interest - Rocketed from $100 to $130, back down to $110, now back at $130 over the last 5 days. IRM - Melvin has puts, possibly short. BlackRock has 16.7 million shares. 82.49% institutional ownership, a "small" 17.47% short interest. Starting to show unusual activity. Popped from $30 to $34 in a day, dropped to $32, then up 4.02% for the day with a heavier than average volume for them. GME - Melvin is so short he's in the quantum realm with Ant Man. BlackRock is the 3rd largest holder behind Fidelity and Ryan Cohen. 117.15% institutional ownership, 140.31% short interest - Share price just gravity boosted around the moon and is on its way to Mars after Elon called it home. That's just what I've seen, so far. Maybe it's nothing and BlackRock is just everywhere and owns everything. Maybe an intern at Melvin upper-decked a BlackRock toilet. Either way, if Melvin shorted it, it's been moving skyward. But either way, the above link is a list of possible assets that would be liquidated upon Melvin's demise.
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My thoughts, as well. I'm targeting anywhere between $500 and $700, at this point. Very few will hit the top, a lot will lose a lot of money unable to pick the right price after each halt. I would rather hit it on the way up than the way down.
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After I sell, I'm buying back into GME when it settles back down to earth. I'm very bullish long with Cohen and two other Chewy people involved, combined with Reggie Fils-Aime. Before the squeeze, the cash on hand and assets gave GME a FMV of ~$12 a share. Short selling is what pushed it to single digits. So, although it was a dying business model, the situation wasn't as dire as the short sellers wanted you to believe. What made Chewy so successful was its customer focused model. GME has two decades of individual customer information. Purchasing habits, names, addresses, phone numbers, collectible purchases, and on and on. What shows me that guys like CNBC don't understand the video game industry is that they say that GME isn't needed. It's a useless middleman. That's not true. If that were true, Steam wouldn't exist. GME's direct competition in the future will be Steam. But what GME has that Steam doesn't is long term relationships with Microsoft, Sony, and Nintendo. If GME can integrate a Steam-like platform at the console level and undercut the royalty split that Steam has with developers on PC, combined with customer data and name-brand recognition (especially after today. GMemE), GME suddenly becomes the first choice for both digital and disc sales.
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An SEC filing came out at close that showed the BlackRock increased their position by 2 million shares. It might an interesting research project to see which stocks Melvin is short that are being held by BlackRock. If BlackRock got tired of Melvin pissing in their Cheerios, they might be out to crush them. I should edit to add that by the time anyone gets the list together, Melvin might be liquidated already. It was an interesting thought I had earlier today when Melvin had a lot more runway.
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When it hit 150 yesterday and the entire market dropped 1.5%, that was probably someone getting absolutely melted. A person might be able to time buying opportunities as short hedge funds fall one by one.
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This. There is an argument that could be made that GME has a fiduciary duty to not dilute their shareholders. However, I don't think that argument would pass muster under these circumstances. The company can write its own ticket with these prices. And they will. But not before they let the funds that almost bankrupted them bleed to death in the street. Then they'll load up on enough cash to give themselves plenty of room to turn the ship.
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We could be in the short squeeze now. As the shorts weigh heavy on the various books, the brokers will margin call them. When they don't have money to cover the margins, all of their positions get liquidated by the brokers and the proceeds are used to make the shorted shares whole. But there aren't enough shares.
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