This story is constantly being framed as "the angry mob" vs "Wall Street hedge funds". But surely other professional investors ((hedge) funds, high frequency traders, algorithmic traders) are also jumping on the bandwagon, to (1) eliminate a competitor and (2) make a profit themselves on the way. I read yesterday that (at least one platform for) algorithmic traders have been monitoring subreddits like /r/WallStreetBets since the start of 2020, to immediately buy what is mentioned favorably there before retailers bring the price up.
The way I see it, is that among the professional investors, one will lose hard (Citron), while most others will profit. When the sell-off starts, they'll be able to sell first, thanks to their sub-ms connections to exchanges, algorithms that monitor media in real time (including reddit!), and employees that are constantly monitoring this whenever the markets are open (as opposed to retailers doing this in their free time).
Among the retailers, a few will win big (/u/DFV), while most will lose. They'll either stubbornly "HODL" if they're in it to "get a message across", or if they're in it for profit, they'll notice the sell-off too late and act too late, probably exacerbated by RobinHood suffering outages at that point.
So my prediction is that in the end one hedge fund will go down while others will profit from it... Most retailers will lose. Then what was the point?
I still feel like these stories are missing a core distinction.
If these WSB folks rallied around GME because they were true believers of a beloved brand with faith in a turn around plan, god love em. I think that’s an interesting phenomenon that upgrades retail collective trading in much the same ways mutual funds behave on behalf of loads of retail investors.
But that’s not what happened. The brand is irrelevant. It’s just math and vengeance and in the end...a lot of retail folks are going to be left holding the bag as prices drop down to earth. That cannot be a good outcome for anyone. I don’t think we want a system to function like this.
This article claims the catalyst for GME’s meteoric rise was a change to their board altering the company’s narrative. Josh Gross claims it’s because u/DFV liked their 10-Qs. So which is it? One? Both? Neither?
https://twitter.com/endtwist/status/1354547622133051393?s=20
This feels like "damning with faint praise": "Yeah, yeah, sometimes they break the rules but they say there's no significant court case they lost."
>They are very open about the fact that they or their clients may already have short positions in the stocks concerned and as I said, most of what they say is publicly available information. Clearly, they are not doing anything illegal, or even underhand. They have been sanctioned a few times by regulatory authorities and lost legal battles overseas but, as founder and Executive Editor Andrew Left has frequently pointed out, they have never lost a significant court case in America.
Off topic but I noticed a large number of large empty white spaces. Then I realised that my browser is blocking all those ads. Kind of sad how much of that page is ads.
Double irony. The story is not over.
When the GameStop valuation jumped to ridiculous levels, it was obviously noticed by others who started shorting.
The end result of this is that some in the WallStreet are making even more profits than Citron Research. This time it's on the backside of those retail investors who think "holding the stock" is protecting it's price.
Citron Research was caught on surprise by WSB, these new speculators have the benefit of weighting and analyzing WSB group action. They can take account possible short squeeze risk and duration and take a long view.
https://isthesqueezesquoze.com/
>GME shorts have not begun to close their positions in substantial numbers.
>the situation (1/28 5 PM ET):
>- short interest: 100% of float by Ortex, 123.25% of float by S3 Shortsight
>- change in short share availability: +9,000
Matt Levine covers all scenarios nicely, must read as always: https://www.bloomberg.com/opinion/articles/2021-01-28/knowin...
I agree that Citron and especially Left is indeed ironic in this situation (and the refreshing reminder that a: American English is derived from English English and b: the internet is not just Americans). The small-scale market (as a group) is doing the exact things as him in other instances, but the call for restrictions is, to say the least, confusing.
I swear, GME is the feel-good story of the year.
I keep seeing folks saying that retail will be left holding the bag. Retail folks are buying GME and holding. Worst case they're out their initial investment. GME shorts like Melvin Capital are out many multiples of their initial investment, their losses are unbounded. Retail (r/wsb) understands this, and is willing to lose their $600 or whatever to screw over the institutions.
How are people missing that the original bet on this was founded around the newest generation of consoles shipping with Optical Drives? That was the entire basis on which Gamestop reapproaching retail with a new mindset and new investment led to wsb getting behind it in the first place.
Source, u/DeepFuckingValues earliest comments on reddit on GME around Mark Cubans involvement
Andrew Left of Citron Research today announced that Citron will no longer research and invest in shorts. They will now cover long positions. He's trying to reverse his image with WallStreetBets. I hope it is in good faith, he likely just sees an opportunity.
Nice post, with clear language and a very good explanation of what is happening :-)
Ahh I love financial reporters. Just because Left has never lost a court case doesn’t mean he isn’t doing anything illegal. There are two tiers of justice in this country, and the rich can by their way out of crime.
I'm English, and I don't know what point he's trying to make about being English
> Left claims that the “mob” has overstepped the mark and harassed him and even his family in a way that is actually illegal. If that is true, shame on them, and those involved should be prosecuted. This must be condemned without hesitation; nothing excuses that type of behavior. Online harassment of those with different opinions, particularly in pursuit of profit, is disgusting and becoming all too common, and standing up against it is important. (...)
I'm a bit lost with this article. What have an "angry mob" been doing to Andrew Left and his family in an "actually illegal way"? Seems to me this article is swaying to some type of narrative someone wants to propagate rather than aiming to be somewhat objective regarding current events.