Explaining What Has Been Going On In the Market
- Thread starter Toro
- Start date
Deplorable Yankee
Diamond Member
He also posted this roflmao
It was a crypto bas3d on a meme that never went anywhere
Its still under a dollar....but up 500%
Toddsterpatriot
Diamond Member
Missourian
Diamond Member
Ok...
I had to do some research to understand some of this.
The float is the number of tradable shares available...
And the short percentage is the float (all shares available...theoretically every share the company has ever sold) divided by the total number of short positions...
1) How can the short percentage be 139%?
IOW...how can traders borrow more shares than the total available?
2) Since the short percentage is publicly available... everyone could see this vulnerability. If the system isn't rigged...why didn't another fund exploit this vulnerability.
3) If the Market's position is that this behavior by the Retail Traders is illegal or unethical... aren't they arguing against themselves?
... what is the difference between a fund pooling investors money by convincing those investors that collectively they can be more effective and powerful ...and a retail investor that convinces other retail investors that collectively they can be more effective and powerful?
I had to do some research to understand some of this.
The float is the number of tradable shares available...
And the short percentage is the float (all shares available...theoretically every share the company has ever sold) divided by the total number of short positions...
1) How can the short percentage be 139%?
IOW...how can traders borrow more shares than the total available?
2) Since the short percentage is publicly available... everyone could see this vulnerability. If the system isn't rigged...why didn't another fund exploit this vulnerability.
3) If the Market's position is that this behavior by the Retail Traders is illegal or unethical... aren't they arguing against themselves?
... what is the difference between a fund pooling investors money by convincing those investors that collectively they can be more effective and powerful ...and a retail investor that convinces other retail investors that collectively they can be more effective and powerful?
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Missourian
Diamond Member
Well...if Melvin started 2021 with $12 billion and lost 30% ... They're down to $8 billion.
Citadel infused $2 billion...so.. roughly 1/5 of Melvin's current capitol is a Citadel investment.
Citadel, Point72 to invest $2.75 bln in hedge fund Melvin Capital
Melvin Capital Management said on Monday it would receive an investment of $2.75 billion from Citadel, the Chicago-based hedge fund led by Ken Griffin, and billionaire investor Steven A. Cohen's Point72 Asset Management. The infusion is expected to help stabilize the hedge fund, which has been...
ca.finance.yahoo.com
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Toddsterpatriot
Diamond Member
1) How can the short percentage be 139%?
1000 shares outstanding. Melvin Capital borrows 700 shares and sells them.
Citron Research borrows 690 shares and sells them.
Long stock holders now hold 2390 shares, Melvin is short 700, Citron is short 690.
Synthaholic
Diamond Member
- Jul 21, 2010
- 76,161
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Toddsterpatriot
Diamond Member
Citadel is a hedge fund that owns Melvin Capital Management.
Link?
Citadel owns the app Robinhood.
Link?
Missourian
Diamond Member
That part makes sense...
And understand...I don't know my ass from my elbow when it comes to trading...I don't know the rules or regulations or the etiquette (if that exists)...
...sure...I knew in lay terms the nature of shorting a stock, but before this week I had never heard of a short squeeze.
But...if this was my livelihood, and I see a stock that was shorted 39% more than the entire pool of shares available in the universe...it doesn't take a rocket surgeon to spot the chink in this particular armor...
Toddsterpatriot
Diamond Member
Sometimes a short squeeze works, for a while, sometimes it doesn't.
AFAIK, this is the first time sometime like this has happened with social media.
The madness of crowds.....what could go wrong?
This is the first time all the little guys teamed up to conspire against the big guys. It’s going to hurt a lot of them in the long run as all always is the case with mania, because GameStop has a obsolete business model and sooner or later fundamentals will be reflected in share value, if not for GME’s strong management the company would have been at 0 by now, but it’ll get there eventually
- Thread starter
- #53
Citadel Securities doesn't own Robinhood, but they account for a good chunk of their flow.
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- Thread starter
- #54
It was very prevalent before the GFC. I don't know about now.
- Thread starter
- #55
I said earlier that I estimated the hedge funds had lost $300 million. I'd meant to say $300 billion. But that's wrong too. It's closer to $100 billion. That's not all in GME et al but rather the losses they've incurred in the market caused by the gyrations.
Missourian
Diamond Member
That was my first thought as well.
I honestly didn't suspect this coalition would hold together.
But I also don't know how long the short sellers had been holding the position and when the term of the short was up.
If it was imminent... then the coalition only required limited cohesion to extract maximum profit...but if the short sellers had time...and didn't panic...they could have whittled away some of the more skittish newly minted millionaire and hoped dropping prices would spook enough of the reset to take what they could get until the stock cratered.
That would have been my strategy...from the armchair...without my money or reputation on the line of it failed.
But that really isn't the point.
The failure here was in the response.
The no holds barred, CYA at all costs and damn the torpedoes approach has done far more damage than the billions of dollars lost in a short- squeeze.
There was panic...but also ego involved here...and that is a very dangerous combination.
IMO...the hedge funds used their influence to lean on the Retail Trader Brokers in order to screw over the retail trader.
I can't see any other explaination.
"The Verge clarified at least part of the business relationship between Robinhood and Citadel:
Does Citadel Own Robinhood?
On January 28 2021 the popular stock trading app Robinhood controversially halted trading of two viral tickers ($GME and $AMC) following the improbable rally of $GME, leading to whispers that Robinhood was owned by Citadel — a capital firm purportedly adversely affected by the whole mishegas...
www.truthorfiction.com
- Thread starter
- #57
Citadel Securities is owned by Ken Griffin. It is a separate entity from the Citadel hedge fund.
Robinhood is a platform where people can trade. But Robinhood isn't an execution broker. They contract that part of the business to execution brokers like Citadel Securities. Robinhood sends this "trade flow," or "flow," to execution brokers like Citadel. It is perfectly legitimate and reasonable for an execution broker like Citadel to halt trading in stocks for reasons I've described above.
The accusation is that the Citadel hedge fund shorted the stock after Citadel Securities halted trading. In theory, this is perfectly legal as they are separate entities as long as there was no dissemination of insider information between the entities. But if Citadel Securities told the Citadel hedge fund that it was halting information before it publicly disseminated the information, and then the hedge fund shorted the stock based on that information, that is a crime.
What makes it difficult is knowing the flow of information. There are all sorts of rumors in the market all the time, and sometimes people act on them. All the pros know that what's happening in stocks like GME is crazy and won't last. So if someone hears a rumor then shorts the stock because of it, that's not an uncommon practice.
- Thread starter
- #58
That was my first thought as well.
I honestly didn't suspect this coalition would hold together.
But I also don't know how long the short sellers had been holding the position and when the term of the short was up.
If it was imminent... then the coalition only required limited cohesion to extract maximum profit...but if the short sellers had time...and didn't panic...they could have whittled away some of the more skittish newly minted millionaire and hoped dropping prices would spook enough of the reset to take what they could get until the stock cratered.
That would have been my strategy...from the armchair...without my money or reputation on the line of it failed.
But that really isn't the point.
The failure here was in the response.
The no holds barred, CYA at all costs and damn the torpedoes approach has done far more damage than the billions of dollars lost in a short- squeeze.
There was panic...but also ego involved here...and that is a very dangerous combination.
IMO...the hedge funds used their influence to lean on the Retail Trader Brokers in order to screw over the retail trader.
I can't see any other explaination.
"The Verge clarified at least part of the business relationship between Robinhood and Citadel:
Does Citadel Own Robinhood?
On January 28 2021 the popular stock trading app Robinhood controversially halted trading of two viral tickers ($GME and $AMC) following the improbable rally of $GME, leading to whispers that Robinhood was owned by Citadel — a capital firm purportedly adversely affected by the whole mishegas...
That's true, but this has been around in one form or another since stock markets were created 300 years ago. Since electronic trading began, brokers have paid for flow in one form or another.
Robinhood also makes money investing in the cash balances of its clients.
Missourian
Diamond Member
From the outside looking in, this entire debacle appears incestuous, unseemly and rigged.
That the House has stacked the deck so that they never lose...and if the little guy somehow manages to take a pot, the insiders collude to shut down the game and take them into the backroom to kick the crap out of them until they get their money back.
That may not be the reality...(In this day and age when no institution can be trusted, it's hard to divine any objective truth)...but that's the optics.
We might not agree on much politically anymore...and perhaps we never did...but I think you and Toddsterpatriot are good dudes and I do appreciate your explainations of this complex topic and I trust your expertise.
Pavel Svinchnik
Senior Member
- Jan 28, 2018
- 137
- 39
- 56
If there are only 1,000 shares outstanding, how can long stock holders end up with 2,390?
If Melvin borrows 700 of the only 1,000 outstanding shares, there are only 300 left to borrow; how does Citron then borrow 690? If I hold a share, can I loan it out more than once, creating new shares from thin air?
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