Crushing the Hedge Fund shorts

resilient1

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Trusted Member

Investors piling into heavily shorted stocks costing hedge funds and their 'privileged' investors to lose billions! Love it, gut the pigs. This redefines the saying, where there's blood in the streets buy stocks, to when hedge funds are bleeding, keep stabbing...
 

Investors piling into heavily shorted stocks costing hedge funds and their 'privileged' investors to lose billions! Love it, gut the pigs. This redefines the saying, where there's blood in the streets buy stocks, to when hedge funds are bleeding, keep stabbing...


sorry am not an investor but do find this interesting

in layman's (idiots) terminology could you explain what happened here?
thank you
Bull
 
sorry am not an investor but do find this interesting

in layman's (idiots) terminology could you explain what happened here?
thank you
Bull
From my understanding there was hedge funds who were attempting to short these stocks. The contracts they had for the lenders and stocks were coming to an end; to which they needed to complete the process of selling and buying. Then return the stocks to the original holders. However everyday investors said fuck you and kept buying these stocks to keep the price high, forcing the hedge funds to lose millions. So that when the hedge funds went to go buy them back they lost insane amounts.

An investment app called robinhood attempted to block out the buying of these stocks from retail consumers so that the more privileged share holders could still buy and sell at will in order to manipulate the prices.


That is my VERY basic understanding of the situation. So anywhere I went wrong please correct me as I'm trying to learn as much we I can about the situation.
 
hedge fund bet that the price of CME stock would drop so they "borrowed" shares to sell, with a promise to return them.
They bet they could by them cheap, and borrowed more than existed on the open market. (140%)

a competing hedge fund saw they were over exposed so bought up all the liquidity, thereby driving the price up and keeping it up, forcing the 1st hedge fund to have to buyback shares at an inflated price.

This kind of thing happens all the time,
but the difference this time is that hedge fund company #2 was made up of 1000's reddit users buying up all the liquidity.
 
second part, per @Jestopherson
is that some brokers acted inequitably (possibly illegally) by preventing the average joe from being able to buy, but still allowing them to sell.
whereas the institutions were allowed to buy and sell.
kinda like locking the steerage class into the holds of the titanic to allow the first class to make it to the lifeboats.
lots of these guys said fuckit, I don't care if I drown and are refusing to sell.

this had an unwanted Streisand effect, drawing attention from billionaires around the world who joined in and piled on to the squeeze.
 
hedge fund bet that the price of CME stock would drop so they "borrowed" shares to sell, with a promise to return them.
They bet they could by them cheap, and borrowed more than existed on the open market. (140%)

a competing hedge fund saw they were over exposed so bought up all the liquidity, thereby driving the price up and keeping it up, forcing the 1st hedge fund to have to buyback shares at an inflated price.

This kind of thing happens all the time,
but the difference this time is that hedge fund company #2 was made up of 1000's reddit users buying up all the liquidity.

The other thing to note is that when you short a stock, as @Heraclitus mentioned, you are borrowing that stock with the intention of selling for a profit once the share price decreases, i.e. your gain or profit results from a decrease in the stock price in the future. It's simply the inverse of a normal stock purchase.

However, when you short a stock your liability is (potentially) infinite, that is, so long as the stock rises you are on the hook to make up the spread if/when you want to reduce or eliminate your position. If you don't, as the borrower, you will be called on your loss, meaning you have to cover the interest on that difference, which is huge, or attempt to exit. Eventually, and this is what the 'activist investors' are betting on, is that there will be a short-squeeze. That is when those who hold the shorts are forced to buy up remaining stock in order to put a ceiling on their losses, but in doing so it will massively reduce/eliminate remaining liquidity (available shares) which will send the stock price soaring. It's a nightmare situation for a hedge fund or any investor going short, as they will eventually be forced to cover their positions at an enormous loss.

So, all in all, these funds are sweating now b/c they are out billions (on paper) unless the price drops a lot, which does not appear to be happening.
 
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The oxymoron here is that the hedge fund literally did not hedge its bet.
No one believed there would be a horde on a war path to rape and pillage. To be fair, this all started with one guy who started accumulating calls a year or so ago, and turned a small investment into 33M. As this progressed others took notice and decided to make the hedge fund bleed. It's quite a thing. As the saying goes, life is often stranger/more interesting than fiction.

I can't wait for the litigation and class action lawsuits against the likes of Robinhood, Ameritrade, and Schwab.
 
There is a short squeeze going on in silver too. First Majestic stock went from $18 to $24 overnight.

I'll go out on a limb here and predict this new evolution in trading will be fingered as the 'reason' for the second wave market crash when it finally comes.
 
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There is a short squeeze going on in silver too. First Majestic stock went from $18 to $24 overnight.

I'll go out on a limb here and predict this new evolution in trading will be fingered as the 'reason' for the second wave market crash when it finally comes.
Bring on the crash! I wouldn't buy at these prices. I'm hoping for another 2009....BMO was under $20.
 
The other thing to note is that when you short a stock, as @Heraclitus mentioned, you are borrowing that stock with the intention of selling for a profit once the share price decreases, i.e. your gain or profit results from a decrease in the stock price in the future. It's simply the inverse of a normal stock purchase.

However, when you short a stock your liability is (potentially) infinite, that is, so long as the stock rises you are on the hook to make up the spread if/when you want to reduce or eliminate your position. If you don't, as the borrower, you will be called on your loss, meaning you have to cover the interest on that difference, which is huge, or attempt to exit. Eventually, and this is what the 'activist investors' are betting on, is that there will be a short-squeeze. That is when those who hold the shorts are forced to buy up remaining stock in order to put a ceiling on their losses, but in doing so it will massively reduce/eliminate remaining liquidity (available shares) which will send the stock price soaring. It's a nightmare situation for a hedge fund or any investor going short, as they will eventually be forced to cover their positions at an enormous loss.

So, all in all, these funds are sweating now b/c they are out billions (on paper) unless the price drops a lot, which does not appear to be happening.


This is a great explanation
 
Three cheers to Reddit's WallStreetBets retards (that's exactly what they refer to themselves as, retards, lol)

They single handedly took a hedge fund to task, and did a lot more as a result. This is a great explanation why hedge funds deserve to bleed, and their management deserves to lose their jobs. They are parasites, nothing more. Unfortunately, the rules have been written to help them, not regulate them, but with some luck, and more activist investing this will change.

 
This could be a great thing.

Leon tweeting about BTC now too. This could pump crypto with guys jumping in on Doge
I may add a some on Monday. I couldn't believe a billionaire would do an interview virtually crying that what was happening wasn't fair. How dare retail investors make the wealthy elites lose money?
 
WOW šŸ˜³ I jest got chance to see this now I know what everyone has been talking about. See I donā€™t watch TV I read a lot probably be good to turn the telly occasionally lol
 
I may add a some on Monday. I couldn't believe a billionaire would do an interview virtually crying that what was happening wasn't fair. How dare retail investors make the wealthy elites lose money?
Pretty much manipulating the system to win, then gets it done to him and cries, boo, hoo.
What a baby.
 
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