My Not So Short Story on GME

[TwiceHorn 31431]

13 minutes ago, EuroHorn said:

Yea and the massive short positions were there because there’s a very very high probability that GME was heading to bankruptcy. This wasn’t taking a viable company like Microsoft and having massive short selling put them out of business.  

I'm not arguing that short selling is bad per se or that GME didn't "deserve" a short position.  There's probably a short position on everything.

But I might argue that 140% short is abusive and retail investors' response was no more unjustified than the actions that resulted in that degree of nudity.  And noisy shorts like Ackman bug me.

Edited January 29, 2021 by TwiceHorn

[EuroHorn 3250]

 

Just now, 52-80 said:

but that's not up to you or any arbitrateur to decide, w.r.t. how the stock should be traded.

the issued shares are a secondary instrument, "freely" (lol) traded on a secondary market.  if people buying and selling decide that the price is $350/share, even if the underlying company that the microfractionalequity ownership represents is totally shit, thats for them to decide, not you.

What the underlying shares are trading for doesn’t trump the underlying financial fundamentals. The shares are trading high because people are buying for no other reason than to fuck the short sellers. GMEs TTM Ebitda was -590m. Even if they paid off all of their debt it doesn’t move the needle on EBITDA. 

[Eastwood 4394]

1 minute ago, EuroHorn said:

What were they going to change fundamentally with the $75 million. Selling games online?

Actually, yes. GME has two decades of customer data, brand recognition, and a revenue sharing agreement with Microsoft where GME gets a share of the revenue from all products purchased online through XBoxes sold through them. It will actually go beyond online, however. I believe that their direct competition will actually be Steam. Anyone familiar with Steam knows that it is an online platform that not only allows a person to purchase games, it also has a social media element to it that allows friends to engage directly with each other in an incredibly streamlined fashion. Their ecommerce numbers have already gone about as parabolic as their stock price. All they need now is Cohen's customer heavy focus and online market touch to utilize the name recognition, which by the way has now been massively boosted further through all this, and run the customer data through similar algos that Chewy used. Additionally, their stores are already in the process of becoming PC building stations where customers come in, pick out parts, and build the PC in store with the assistance of GME staff.

When this is all said and done, I think GME is going to be a very dangerous company in the video game space, which has exploded into a multi-hundred billion dollar industry. That's why I'm starting to look at selling some puts so I can get my shares back when the dust settles. Then I'm holding very long term.

[52-80 19140]

3 minutes ago, EuroHorn said:

 

What the underlying shares are trading for doesn’t trump the underlying financial fundamentals. The shares are trading high because people are buying for no other reason than to fuck the short sellers. GMEs TTM Ebitda was -590m. Even if they paid off all of their debt it doesn’t move the needle on EBITDA. 

whats the underlying fundamental that makes this $50M, and who are you to tell discourage me from paying for it?

edit: or, im only allowed to sell it to certain groups of people, but not others who truly want to buy it?

 

Edited January 29, 2021 by 52-80

[EuroHorn 3250]

1 minute ago, 52-80 said:

whats the underlying fundamental that makes this $50M, and who are you to tell discourage me from paying for it?

 

 

Well I have one share stock certificate of Enron I can sell you (I actually do).  It’s worth millions !

Edited January 29, 2021 by EuroHorn

[EuroHorn 3250]

4 minutes ago, Eastwood said:

Actually, yes. GME has two decades of customer data, brand recognition, and a revenue sharing agreement with Microsoft where GME gets a share of the revenue from all products purchased online through XBoxes sold through them. It will actually go beyond online, however. I believe that their direct competition will actually be Steam. Anyone familiar with Steam knows that it is an online platform that not only allows a person to purchase games, it also has a social media element to it that allows friends to engage directly with each other in an incredibly streamlined fashion. Their ecommerce numbers have already gone about as parabolic as their stock price. All they need now is Cohen's customer heavy focus and online market touch to utilize the name recognition, which by the way has now been massively boosted further through all this, and run the customer data through similar algos that Chewy used. Additionally, their stores are already in the process of becoming PC building stations where customers come in, pick out parts, and build the PC in store with the assistance of GME staff.

When this is all said and done, I think GME is going to be a very dangerous company in the video game space, which has exploded into a multi-hundred billion dollar industry. That's why I'm starting to look at selling some puts so I can get my shares back when the dust settles. Then I'm holding very long term.

Well good luck.

[52-80 19140]

1 minute ago, EuroHorn said:

Well I have one share stock certificate of Enron I can sell you (I actually do).  It’s worth millions !

i legitimately always wanted a paper stock certificate, as i saw occasionally referenced in tv and movies growing up

[EuroHorn 3250]

1 minute ago, 52-80 said:

i legitimately always wanted a paper stock certificate, as i saw occasionally referenced in tv and movies growing up

You could order one out.  It cost me $25 after i rode the stock almost all the way down. I figured I might as well get a souvenir 

[BradInATX 9208]

What were they going to change fundamentally with the $75 million. Selling games online?  Their current business model will be nonexistent unless they reinvent themselves 

Your argument is circular and fucking stupid.

"Had the hedge funds not gotten caught breaking the law and manipulating the market illegally it totally would have worked!"

Congrats on getting the point of the entire thing.

[Continental Op 3934]

Which hedge fund that got torched by this does EuroHorn work for?

[DonkeyCigars 144]

Lol. Yea euro horn is obvi a finance bro; but I also agree with him. GameStop is crap and this is the best thing that could have ever happened to them and they still screw it up. I’m bearish on them once this forest fire burns out. 

[EuroHorn 3250]

4 minutes ago, BradInATX said:

Your argument is circular and fucking stupid.

"Had the hedge funds not gotten caught breaking the law and manipulating the market illegally it totally would have worked!"

Congrats on getting the point of the entire thing.

Oh I didn’t know the hedge funds broke the law. Which one did they break?

[EuroHorn 3250]

5 minutes ago, Continental Op said:

Which hedge fund that got torched by this does EuroHorn work for?

No I actually think it’s funny what Reddit did. But the short selling was not going to force GameStop into bankruptcy. 

[52-80 19140]

8 minutes ago, EuroHorn said:

You could order one out.  It cost me $25 after i rode the stock almost all the way down. I figured I might as well get a souvenir 

if i knew schwab did this, i wouldve gotten one from the last remaining piece of trash DSPP issue i received.

over a decade participation and last year finally had to cut ties (from the plan, not the employer)

[Fudge Nuggets 19184]

9 hours ago, TwiceHorn said:

Naked shorts are already illegal, but happen on a fairly massive scale on the daily.

There should be a reckoning.

Shorting is necessary for "price discovery," I suppose, but it's a nasty business.

Short sellers used to be the absolute best investors in the world because of the amount of risk it takes to sell stocks short.  We need a lot more guys like Jim Chanos in the investment world and a lot less Muddy Waters types.

8 hours ago, crash_davis said:

So is members of Congress making trades with private knowledge had from closed door congressional meeting.

Yeah, that ain't illegal surprisingly enough.

 

[52-80 19140]

muddy waters and wolfpack does pretty solid work from what ive seen

its citron thats a complete dog

[gsoda3 3245]

shorting a stock naked:  that's when you short a stock without first preborrowing any shares.  whether or not you have to physically request shares to preborrow is up to your broker.  if your broker has a ton of long inventory of that stock, you probably don't have to request a preborrow before you short.  they'll already have a bunch set aside to short for anyone who wants to do so.  these are called Easy To Borrow stocks.  sometimes, inventory is low in some names so you have to request a preborrow and can only start shorting after you get an affirmative answer.  when you locate shares to preborrow in this manner each share you locate costs money.  anywhere between $.0025 to sometimes over $10 / share.  it all depends on your broker's inventory.  naked shorting is when you do not go through this process before shorting.  it has nothing to do with shorting > 100% of the float. 

 

1 hour ago, Eastwood said:

Actually, yes. GME has two decades of customer data, brand recognition, and a revenue sharing agreement with Microsoft where GME gets a share of the revenue from all products purchased online through XBoxes sold through them.

that microsoft deal is relatively new.  i think they announced it back in december?  up til then, their business model had most everyone thinking they eventually were on the road to bankruptcy.  even with the microsoft deal there's a lot of skepticism as to whether or not it's going to be a bull case.  can they sell enough xboxes to survive?  i'm doutbful, but at least there's a way forward for them now.

[TwiceHorn 31431]

1 hour ago, Fudge Nuggets said:

Short sellers used to be the absolute best investors in the world because of the amount of risk it takes to sell stocks short.  We need a lot more guys like Jim Chanos in the investment world and a lot less Muddy Waters types.

Yeah, that ain't illegal surprisingly enough.

 

Good point.  There are good shorts that do the research and find the dogs and then quietly bide their time.

Then there are assbags like Ackman that go public with their disparagement to make their predictions come true, and still eat their dick down to the balls.

[52-80 19140]

3 minutes ago, gsoda3 said:

naked shorting is when you do not go through this process before shorting.  it has nothing to do with shorting > 100% of the float.

technically not. theres only 1 share in the world and you borrow it from steve to loan to bob, then borrow from bob to loan to mike.  SI = 200% of float.

given the fact that there are multiple brokerages and the share ownership is spread out, to have >100% float, wouldnt it stand reasonably that they probably *didnt* locate all the shares to short. 

afterall, its not like noone has ever broken SHO regulations.

[TwiceHorn 31431]

4 minutes ago, 52-80 said:

technically not. theres only 1 share in the world and you borrow it from steve to loan to bob, then borrow from bob to loan to mike.  SI = 200% of float.

given the fact that there are multiple brokerages and the share ownership is spread out, to have >100% float, wouldnt it stand reasonably that they probably *didnt* locate all the shares to short. 

afterall, its not like noone has ever broken SHO regulations.

Trading is so chaotic that some shorts are going to end up naked, I'm sure, by accident.  But you have to think that 140% involved some pretty serious disregard of the availability of shares for short positions.

[gsoda3 3245]

1 minute ago, 52-80 said:

given the fact that there are multiple brokerages and the share ownership is spread out, to have >100% float, wouldnt it stand reasonably that they probably *didnt* locate all the shares to short.

no, because all the brokerage sees when it comes to their long inventory is that they have it long.  there's no blockchain type info attached to each long position immediately detailing its origin.  but here's where it gets tricky.

 

first off, trades take 3 days to settle (that is, the shares take 3 days before they actually hit, or in brokerage language "clear", your account at the brokerage):  the first day is the day you enter the trade, the second day is the day after, and the 3rd day is the 2nd day after you enter the trade.  because of this T+2 timing and due to the # of trades that occur each day, sometimes short shares are "called-in".  this happens when the brokerage is notified that there are too many shares preborrowed due to an increasing # of shorts being generated.  brokerages do their best to predict what % of their long inventory is "too much" to give up to pre-borrows, but it's an inexact science.  when your shares are called-in the brokerage usually automatically buys you back in immediately to keep the firm from being naked short.  the worst part of being bought in is it can happen at any time up to T+2.  this is a rare occurrence but it does happen. 

[gsoda3 3245]

3 minutes ago, TwiceHorn said:

Trading is so chaotic that some shorts are going to end up naked, I'm sure, by accident.  But you have to think that 140% involved some pretty serious disregard of the availability of shares for short positions.

it's quite hard to get naked short on purpose.  i've never seen a trading platform allow it and i've had access to all kinds of professional platforms.  it happens by accident on occasion but when caught by ops or risk management is always closed out immediately.  that's street wide.  i've never heard anything different, which is why i don't think there was a disregard for preborrowing availability. 

 

the 140% short has a quirk.  basically, there's more than one type of short share. along with the ones most are familiar with, there are also short shares created synthetically using options.  most services include both those types when calculating short % of float and frankly i value that # over the other #, which doesn't include the synthetic shorts. 

[hayden_horn 11362]

3 hours ago, EuroHorn said:

Oh I didn’t know the hedge funds broke the law. Which one did they break?

the law of common sense and greed. granted, they usually get away with it, but this time they got caught out. that's the most frustrating part of the analysis around this. gamestop and their business really has fuckall to do with it. what happened is the the hedge fund shorters got shorted by people going long. it is the business model of the hedge funds that is being weighed and measured. 

we will see how it pans out but today was some prime wall street fuckery. 

[StassneyHorn 6573]

Video game nerds have been making millions of dollars for the last 5 decades while people continue to think they know better. As a reformed finance fag, I’m done pretending I know better and will use my knowledge of these boomers to predict how they’ll react...... poorly and blame it on someone else

[EuroHorn 3250]

11 minutes ago, hayden_horn said:

the law of common sense and greed. granted, they usually get away with it, but this time they got caught out. that's the most frustrating part of the analysis around this. gamestop and their business really has fuckall to do with it. what happened is the the hedge fund shorters got shorted by people going long. it is the business model of the hedge funds that is being weighed and measured. 

we will see how it pans out but today was some prime wall street fuckery. 

Willing to bet some hedge funds lost a lot. And others made a lot with the Reddit crowd 

[gsoda3 3245]

the law of common sense and greed. granted, they usually get away with it, but this time they got caught out. that's the most frustrating part of the analysis around this. gamestop and their business really has fuckall to do with it. what happened is the the hedge fund shorters got shorted by people going long. it is the business model of the hedge funds that is being weighed and measured. 
we will see how it pans out but today was some prime wall street fuckery. 

There are many different types of hedge funds. Each is usually formed out of different strategies. Some win sometimes, some lose sometimes. There's no collective "they" if you try to group them by results. We all know about Melvin and their loss. I've heard rumblings of a couple majors with huge losses also. But I know many more funds that have crushed this event.

[EuroHorn 3250]

Apparently this is the guy on WSB who is up over $30m.  He posted this back in July.  Apparently he’s been bullish on GME for quite a while 

 

 

 

[ztejas 43411]

I'm not sure about hedge funds, but judging by GME's ownership %s a lot of mutual funds made a fucking killing. Anyone that held 5 million or more shares - which several funds did - is probably up at least $2 billion right now - just on their fucking game stop position. 

This really is crazy. Im not great on financial history - has anything like this ever happened?

[EuroHorn 3250]

Here are the top mutual  funds and brokers that hold GME

 

https://news.gamestop.com/stock-information/institutional-ownership

Edited January 29, 2021 by EuroHorn

[EuroHorn 3250]

...

Edited January 29, 2021 by EuroHorn

[52-80 19140]

6 hours ago, gsoda3 said:

no, because all the brokerage sees when it comes to their long inventory is that they have it long.  there's no blockchain type info attached to each long position immediately detailing its origin.  but here's where it gets tricky.

 

first off, trades take 3 days to settle (that is, the shares take 3 days before they actually hit, or in brokerage language "clear", your account at the brokerage):  the first day is the day you enter the trade, the second day is the day after, and the 3rd day is the 2nd day after you enter the trade.  because of this T+2 timing and due to the # of trades that occur each day, sometimes short shares are "called-in".  this happens when the brokerage is notified that there are too many shares preborrowed due to an increasing # of shorts being generated.  brokerages do their best to predict what % of their long inventory is "too much" to give up to pre-borrows, but it's an inexact science.  when your shares are called-in the brokerage usually automatically buys you back in immediately to keep the firm from being naked short.  the worst part of being bought in is it can happen at any time up to T+2.  this is a rare occurrence but it does happen. 

yes, quite understood on that mechanics and why SHO and related regulation had to be written and re-written to accomodate for these scenarios.

what im saying is, what if these guys were callous enough to not care about about fully conforming to all of this "inexact science".

[52-80 19140]

6 hours ago, gsoda3 said:

it's quite hard to get naked short on purpose.  i've never seen a trading platform allow it and i've had access to all kinds of professional platforms.  it happens by accident on occasion but when caught by ops or risk management is always closed out immediately.  that's street wide.  i've never heard anything different, which is why i don't think there was a disregard for preborrowing availability.

 

here is where i think this argument falls apart.  these funds put on shorts when SI% was at 60, 80, 100, 120, and stayed in at 140%, and where was risk management to ask, "maybe this is not such a good idea?" or "other guys drove up SI we should unwind our position to not be exposed to this concentration?"

in Q3 Melvin alone held a massively bearish position on GME when it had already been beaten to a bloody pulp at $5/sh

that speaks of immense recklessness and greed which is incompatible with the notion that they truly crossed their Ts and dotted their i's to ensure they wouldn't be naked short, whether on purpose or unintentionally.

 

occam's razor and all.

 

whether they composed the majority or just a (sizable) minority of the short in GME, what this episode also reveals is maybe WS/HF aren't that careful and sophisticated.

[gsoda3 3245]

3 hours ago, 52-80 said:

that speaks of immense recklessness and greed which is incompatible with the notion that they truly crossed their Ts and dotted their i's to ensure they wouldn't be naked short, whether on purpose or unintentionally.

once you've located shares to preborrow, as long as you keep your capital requirements in line it's quite uncommon to have them called in.  other than not being short at all there's no way to dot your is and cross your ts to ensure you never get called in.  i'm not passing judgement on their strategy or motivation when i say this, just their procedural execution-  with the information that's come out so far they did everything right.  

[Fudge Nuggets 19184]

7 hours ago, ztejas said:

I'm not sure about hedge funds, but judging by GME's ownership %s a lot of mutual funds made a fucking killing. Anyone that held 5 million or more shares - which several funds did - is probably up at least $2 billion right now - just on their fucking game stop position. 

This really is crazy. Im not great on financial history - has anything like this ever happened?

Back in 2008 there was an epic short squeeze on Volkswagen shares.

https://moxreports.com/vw-infinity-squeeze/

 

 

[Wulaw Horn 19063]

Is this Belgium tulip market shit or something else physiologically?  
after reading this thread I’m more convinced than ever I’m a simpleton and will stick to my plan of buying and holding investment property houses and pay them off and have cash flow in my retirement in a real and tangible thing that I understand supply and demand and pricing on. 

[Wulaw Horn 19063]

Psychological. Fucking auto correct. 

[Fudge Nuggets 19184]

12 hours ago, 52-80 said:

muddy waters and wolfpack does pretty solid work from what ive seen

Muddy Waters paid for my first Rolex when he put out a hit piece on a Chinese stock that was looking to go private.  The CEO had arranged financing through Morgan Stanley or Goldman Sachs to take the company private at $25 / share.  MW had been slamming this company as a fraud off and on for months so I bought a handful of shares after one piece dropped the price to about $12 / share.  As the time for going private drew near, MW put out another hit piece that sank shares down to $3 and I bought 1,000 shares.

A week later the deal was finalized and the stock hit $24.50 or something to account for a little bit of arbitrage.  Took my money and headed down to the watch shop.

[ajax 2600]

 

 

[Fudge Nuggets 19184]

1 hour ago, ajax said:

 

 

“What is the right thing to do to control this or stop this?”

Why does it need to be stopped?  Tell the hedgies if they get too far over their skis then they are going to wipe out. Pretty damn simple. 

[Guest Lobo]

So we can't just have smaller investors aggregate efforts and capital to steer certain single-issue stocks in a long direction?  

So what the fuck is a pension fund then?  

[hayden_horn 11362]

15 minutes ago, Fudge Nuggets said:

“What is the right thing to do to control this or stop this?”

Why does it need to be stopped?  Tell the hedgies if they get too far over their skis then they are going to wipe out. Pretty damn simple. 

this is the biggest worry for me. i want to think that it could be a sea change in how hedge funds measure risk, but in the end, they'll probably just squash the little guy

[UT_OB1 2213]

5 hours ago, Wulaw Horn said:

Is this Belgium tulip market shit or something else physiologically?  
after reading this thread I’m more convinced than ever I’m a simpleton and will stick to my plan of buying and holding investment property houses and pay them off and have cash flow in my retirement in a real and tangible thing that I understand supply and demand and pricing on. 

This was how I felt before all this went down, and reading about it just pushed me more that way. I will be happy though when my properties get profitable enough to hire a full time mgr so that I’m not the one taking the calls for leaking toilets on the weekend. 

[4th_and_18 687]

So we can't just have smaller investors aggregate efforts and capital to steer certain single-issue stocks in a long direction?  
So what the fuck is a pension fund then?  

A pyramid scheme? One that hopes enough olds die and enough youth joins to support the few olds that live.

[Wulaw Horn 19063]

Thanks for the thread though- very informative. 

[Anastasis 23454]

SIAP.  WSJ's write up on DeepFuckingValue.

https://www.msn.com/en-us/money/topstocks/keith-gill-drove-the-gamestop-reddit-mania-he-talked-to-the-journal/ar-BB1ddhEX?li=BBnb7Kz

 

[EuroHorn 3250]

3 hours ago, Anastasis said:

SIAP.  WSJ's write up on DeepFuckingValue.

https://www.msn.com/en-us/money/topstocks/keith-gill-drove-the-gamestop-reddit-mania-he-talked-to-the-journal/ar-BB1ddhEX?li=BBnb7Kz

 

What’s funny in the video I posted which made in July, GME was trading at $4 a share. He expected it to double or maybe triple in price.  He also mentions around the 49 minute mark that it would be great if they could do a short squeeze. Lol. 

[Anastasis 23454]

Just now, EuroHorn said:

What’s funny in the video I posted which made in July, GME was trading at $4 a share. He expected it to double or maybe triple in price.  He also mentions around the 49 minute mark that it would be great if they could do a short squeeze. Lol. 

Yeah. The squeeze wasn’t really core at all to his trade. 

[MonkeyDoughnut 10226]

Right now this whole thing is a pyramid scheme and the SEC will be forced to wade into it. I don't think they can make anything criminal stick (on either side), but can change the rules to make the "problem" for them go away.

That aside, if I'm truly a GME long believer, GME absolutely must look to issue new shares asap. They could easily bank billions of dollars to move the company in any direction they choose.   

I expect some of the shorts to convince them to do just that and pay then a nice premium to do so... say $500/share... they will add a bunch of longer option offerings to expand the market and try to force the buyers to in an attempt to wait them out. They won't be closing their short positions though, they will hold the long as a risk hedge knowing they can last longer and will be able to see and react much faster than the retail investor when this party comes crashing down.

 

[Updawg 2266]

I don’t understand why intervention is needed. Each side made a choice, let the market figure it out.

I get that rh was over their heads and didn’t have enough to cover their volume and that needs to be looked at. Also seems 140% of shorts should be looked at as well. But otherwise let it play out. If hedge funds get bailed out I’ll be pissed. We know it will eventually tank and whoever hasn’t cashed out will lose but let the shorts lose first

/I don’t know much about this but just my take

[52-80 19140]

Steve Cohen couldn’t stop his ego from egging on retail traders on twitter, and it got him canceled by the internet. Account deleted.