Gamestop?

[Chris]

What's preventing Gamestop from issuing more shares and cashing in on this siutation? Pending earnings perhaps? The wrath of millions of redditors? I recall that when WSB piled on to Hertz -- in bankruptcy -- Hertz filed to issue more shares.

[ertyu]

By the time they get all documentation etc. ready, the squeeze would be long over. You can't really issue shares overnight, the process takes time.

[Ego]

Because of work, I have seen what real misery looks like in the 21st century.

Yes, very true. This is an argument I made in the Trump thread back in 2016.

One of the things I've come to realize since then is that it doesn't really matter. A world underpinned by systems that rely on collective beliefs makes truth insignificant. What matters is not what is true but what people believe to be true.

Also, in the past forty years the poor man's atomic bomb has reshaped our world in extreme ways. As far as I know this is the first time we've experienced that same dynamic applied to the markets on a mass scale. It is hard to create a system that disincentivizes damaging behavior when the actors welcome harm to themselves.

[SavingWithBabies]

@Chris Matt Levine brought up Hertz on his daily email that is also a column here:

https://www.bloomberg.com/opinion/artic ... ever-stops
or
https://outline.com/ZsJaK8

Apparently, while Hertz did indeed do that, the SEC shut them down although they did get $29 million worth sold. But Gamestop already had such an offering going so that should be okay?

Tangential but reading about how Tesla sold directly to the market two weeks before being added to the S&P 500 was interesting (bloomberg or outline). We've had the underlying conversation here about the issues with mutual funds but reading about how that went down has somehow made those potential issues more real to me.

[white belt]

I exited my GME trade today and made $2.6k profit in my IRA on $6k initial investment. I bought in at $229 per share yesterday after RH shutdown trades and sold today at $329 about 10 minutes prior to close. The volatility was quite stressful and I didn't have a well-defined strategy so I will definitely be reading a lot more books and sitting out on this sort of thing for awhile. I just had a gut feeling looking at social media reactions and understanding some of the underlying narratives that there was an opportunity.

I actually think there still could be upside to the squeeze dynamics since most of the shorts are holding on to their positions. However, I think risks are way too high that regulators, brokerages, or some other factor will put a halt to all this before it unwinds further for the hedge funds. I didn't want to give them the opportunity to spend the weekend finding another way to put a stop to this.

I still have very small positions (<$500 total) in NOK and AMC just for fun.

Edit: Overall this was a good learning experience to understand the emotional dynamics of using an active trading strategy. I got lucky on this one, so I have no illusions that I could replicate this performance over the long term.

[CS]

It was fun to watch, that is for sure. On Wallstreetbets some said they have until 6pm to cover their shorts. It's not over yet I guess.

[Lemur]

@White Belt - My thoughts were very similar - if this were me, I would not have better holding over the weekend. Always be happy to make a quick buck like that! Don't do what I do and go back to stocks and say "what if." I've a couple of those. Also, NOK is a long-term hold IMO. I'm definitely thinking about adding a lot more if it goes under $4.

[C40]

Numbers I'm seeing shared are, as of 10am 1/29, short interest: 75.54% of float by Ortex, 113.31% of float by S3 Shortsight. This is 10-20% lower than 1/28 end of day. Previously (when GME price was $40 and lower) it was 120-140%. The volume looks to be quite low starting around mid-day 1/27

It seems to me the shorters are making their way out without driving the price up further, which would be unexpected but perhaps possible because few brokerages allow retail buying of the stock.... and, perhaps they bought more shorts when the price was up somewhere over $300.

When various brokers froze retail investor buying (but still allowed selling), price suddenly dropped from 400 to 120. IDK What did or could have happened there related to the shorting hedge funds. People are saying that Robinhood is triggering sales of (non-margin!) shares or options owned by people

I am feeling less confident that the price will rocket up from here.

I had a limit order I was expecting to trigger a sale today for 1 share a bit over $400, so I'd have most of my principle out, but it didn't hit. For Monday I might lower the price and sell 2 shares in order to sell them for sure and get all my principle. I think buying in around $300 is really risky now. It's hard to say, during a time when many other retail investors are prevented from buying. I might continue holding most of my shares because weird things could still happen and I don't really need to take those profits

(Don't take anything I've written here as certain or useful, I'm just trying to summarize/clarify my own understanding and I am NOT certain that it's correct)

[Scott 2]

I wonder what happens to this guy:

https://www.wsj.com/articles/keith-gill ... 1611931696

Does the SEC make an example of him? Does he turn this into a celebrity trading career? Does he cash out early and become the villain?

[Kriegsspiel]

It was fun to watch, that is for sure. On Wallstreetbets some said they have until 6pm to cover their shorts. It's not over yet I guess.

Don't options expire on the third Friday of the month? This is the fifth Friday of January, so I figured either the contracts had expired already, or else the shorts have another few weeks to weather.

Maybe someone who worked in the quant industry for years could answer!

[suomalainen]

Anyone know who invests in the hedge fund? Dancing on the graves of hedge fund managers is one thing, but I’d feel pretty bummed if we found out they held teacher pension funds or something.

Biggest investors are pension funds, sovereign wealth, endowments and insurance companies. High net worth individuals certainly have money in them, but the institutions rule.

https://docs.preqin.com/newsletters/hf/ ... estors.pdf

I find the whole gamestop thing fun, but the whole "beat the man" narrative is pretty naive or, for those who know better, cynical.

[white belt]

Here's my assessment of the GME situation as it stands:

Bear case
-See earlier posts about gov't/Wall St intervening to maintain the status quo of crony capitalism

-See C40's post about the number of shorts that already liquidated their positions

-Meme trends typically burn out pretty fast as public attention moves to other things

-It seems like the recent people getting in have just been buying GME stock rather than options, which makes it harder to move the market with small amounts of capital and force the same short squeeze dynamic (I haven’t seen the transaction data though so I could be wrong).

Bull case
-The spat between Dave Portnoy and the Robinhood CEO seems to be escalating. Dave Portnoy leads the Barstool Sports media empire and now appears to consider himself as a comrade of WSB. This means he will keep the story in the spotlight and also spread it through his various Barstool channels (an audience we know that is almost exclusively millenials and younger, many of whom also participate in sports gambling). It is possible there already was a lot of overlap between the WSB and the Barstool crowd, but now in Portnoy's eyes they are in on the same cause.

-Payday in the US is on Monday. This means there will be a lot of people with a paycheck burning a hole in their pocket who want to get it on the speculation after a week where these speculators crushed the rest of the market.

-There is no American football this weekend. Why does that matter? Well sports are a distraction for the common people and no football means less distractions and less sports betting (see first point). These people might want to get in on the speculating action just for the excitement.

-This is the only cause I've seen in recent memory that is enjoying broad support from both the right wing media and left wing media in the USA (this is Day 3 of me seeing it on the front page of every major media outlet). We saw what happened with BLM in a variety of urban cities in 2020 and then we saw the storming of the Capitol earlier this month. Now imagine both those sides directing their rage at Wall St and regulators.

-Congressional investigations will bring a lot more attention to this issue. I haven't yet seen a source that indicates a date, so maybe this won't happen until after the impeachment. Basically we have another week for this narrative to build steam before national news coverage will switch to the Trump impeachment.

-Anecdotal: everyone is talking about this. People at my work, people at my gym, random people I don't even know. There are still many people who feel like they missed out and want to get in.

[SavingWithBabies]

Robinhood has restricted trading on a bunch of other stocks too including NOK and AMD. For example, you're only allowed to buy 1 share of AMD, 5 of NOK, etc (it's actually worse than "buy" as it's an aggregate limit so you can't do a bunch of separate orders):

https://robinhood.com/us/en/support/art ... olatility/

Code: Select all

Symbol	Shares	Options contracts
AAL	1	10
ACB	1	Standard limits apply
AG	1	Standard limits apply
AMC	1	10
AMD	1	Standard limits apply
BB	1	10
BBBY	1	10
BYDDY	1	N/A
BYND	1	Standard limits apply
CCIV	1	Standard limits apply
CLOV	1	Standard limits apply
CRIS	1	Standard limits apply
CTRM	5	N/A
EXPR	5	10
EZGO	5	N/A
GM	1	Standard limits apply
GME	1	5
GTE	5	Standard limits apply
HIMS	1	Standard limits apply
INO	1	Standard limits apply
IPOE	1	Standard limits apply
IPOF	1	Standard limits apply
JAGX	5	Standard limits apply
KOSS	1	N/A
LLIT	5	N/A
MRNA	1	Standard limits apply
MUX	5	Standard limits apply
NAKD	5	N/A
NCTY	1	Standard limits apply
NOK	5	10
NVAX	1	Standard limits apply
OPEN	1	Standard limits apply
RKT	1	Standard limits apply
RLX	1	Standard limits apply
RYCEY	5	Standard limits apply
SBUX	1	Standard limits apply
SHLS	1	N/A
SIEB	1	Standard limits apply
SLV	1	Standard limits apply
SNDL	5	10
SOXL	1	Standard limits apply
SRNE	1	Standard limits apply
STPK	1	Standard limits apply
TGC	5	N/A
TIRX	1	N/A
TR	1	10
TRVG	5	10
TRXC	5	Standard limits apply
WKHS	1	Standard limits apply
XM	1	Standard limits apply
ZOM	5	N/A

There is supposedly some odd short activity going on with AMD. I'm not going to try to summarize it as I'll get it wrong but if someone knows more and wants to share, I'd be curious if you think so too.

In the bigger picture, I'm wondering just how much of a chance there is that GME will cause a lot of collateral damage impacting the rest of us. Odds seem good that Robinhood is toast. GME is an epic fuck you to everyone. I admit I was cheering at first but... this is no good for us.

[Redo]

@Chris "What's preventing Gamestop from issuing more shares and cashing in on this siutation? Pending earnings perhaps? The wrath of millions of redditors? I recall that when WSB piled on to Hertz -- in bankruptcy -- Hertz filed to issue more shares."

You mean what AMC did recently?
https://www.marketwatch.com/story/amc-e ... 2021-01-28

The market didn't care.

Edit: I find it funny that this whole GME fight, which is supposed to be WSB vs hedge funds, ended up benefitting Blackrock the most.

[plantingtheseed]

Nine investors, including large fund-running institutions like Fidelity FMR and BlackRock (BLK) plus some well-positioned individuals like Chewy (CHWY) co-founder Ryan Cohen watched the value of their GameStop holdings soar more than $1 billion...

...All told, these nine investors made a total of $16 billion on their GameStop stakes, just this year. (Index wins again)

https://www.investors.com/etfs-and-fund ... src=A00220

[white belt]

@Plantingtheseed, Redo

For the big boys like Blackrock and Vanguard, the profits in GME are a drop In the bucket because they each manage more than $6 trillion in assets. Additionally, few of their clients will really be able to take profits on this gain because they are all buy and hold passive believers. Not only that, I wonder if those gains even offset the losses this week from the rest of the market dropping.

On the individual scale it’s different, but I haven’t seen anything indicating that Ryan Cohen has sold shares yet.

Fun fact: Blackrock/Vanguard AUM combined is greater than China’s GDP. Imagine the lobbying power and you will understand why passive is here to stay.

[C40]

Does anyone know where I can find:
- Which brokers froze buying
- What exact times they made the changes

I'm trying to add these to a price chart so I can better understand the impact they had, their timing, etc.... I can still buy and sell, and understanding this better may change my decisions, timing, limit choice, and resolve to continue holding.

[nomadscientist]

Increasing margin requirements is potentially legitimate, i.e. an action to protect the solvency of the broker in its ordinary business.

Banning buying but not selling is itself market manipulation, just in the favor of connected actors rather than pranksters. In the limiting case, such an action is also equivalent to an expropriation, i.e. theft.

USA has visibly lost the rule of law in the past twelve months, although long term trend is much older. USA assets, and non-USA assets held with USA custodians, should be discounted accordingly.

[Seppia]

Increasing margin requirements is potentially legitimate, i.e. an action to protect the solvency of the broker in its ordinary business.

What do you mean “potentially”?
I thought that when trading on margin, the actor providing you margin could at almost any time ask for more collateral if they thought you were at higher risk of defaulting on the payments.
To say that trading options on GME while being a retail investor qualifies is the understatement of the year.

Banning buying but not selling is itself market manipulation, just in the favor of connected actors rather than pranksters. In the limiting case, such an action is also equivalent to an expropriation, i.e. theft.

It seems like this was due to RH being at risk of going under, as stated above.
I hope you will excuse the stupid analogy, but playing a game where literally 5 minutes can mean a 30% difference in the price of the stock by trading on a free app is like paragliding on wings made out of your bed sheets.

Could work but still a stupid idea even if you survive.

[nomadscientist]

@1: Depends on the intent. You have described a legitimate intent. There may have been others.

@2: There is no risk to RH of zero-margin buys, yet I believe they were also shut down.

Logically, it's impossible to sell without a buyer, so RH was letting "someone" buy - just not its nominal clients.