Timeline for Could some of the other funds have done what Reddit did with Gamestop?
Current License: CC BY-SA 4.0
18 events
| when toggle format | what | by | license | comment | |
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| Feb 2, 2021 at 9:26 | comment | added | Criticizing Israel not allowed | @SteveJessop Well, the WSBers would hope to buy the long positions from the institutional investors before the hedge funds do. In fact the current rumour is that hedge funds should be doubling down on their shorts, and who can blame them for that, since the price is obviously going to go down... | |
| Feb 1, 2021 at 20:19 | comment | added | jamesqf | @Harper - Reinstate Monica: WRT short selling affecting the business, I think the shoe is on the other foot. That is, the claim that short selling, or any other stock trading, directly affects a business is what requires supporting evidence. WRT brick & mortar stores, I would think that a major factor is the need to inspect selections. Though I don't (and won't) patronize Hobby Lobby, the same might be true of say Home Depot or a grocery store, in a way that it's not of a retailer of standardized things like games or electronic parts. Verizon stores I just don't understand at all :-( | |
| Jan 31, 2021 at 19:55 | comment | added | Harper - Reinstate Monica | @jamesqf I think your argument here is rather shallow. First your argument applies equally to ALL bricks-and-mortar from the Verizon store to Hobby Lobby, and fails on that alone. Second, you're armwaving away shipping time... and also the rocks and shoals of ordering online generally: not being able to see it, shady sellers, Amazon Marketplace crap, fake reviews, lost packages, you name it. Third you claim short selling does not affect a business' fate, and such a bold statement needs bolder proofs than fit in a comment. | |
| Jan 31, 2021 at 19:26 | comment | added | jamesqf | @Harper - Reinstate Monica: But I can, and do, order hardware online much easier than in a physical store. I suppose the same would be true for games on physical media. (I'm not a gamer, but I don't see why it'd be different than books.) As a semi electronics geek, I can order components from Jameco or Mouser much easier than I could find them at Radio Shack. And I don't really see the involvement of gamers here: what eventually happens to GameStop as a business has nothing to do with the short selling. (Except for some of GS management selling their holdings at a nice profit :-)) | |
| Jan 30, 2021 at 19:33 | comment | added | DonQuiKong | Gamestop had a market capitalization of a few millions. In theory, if you bought all shares for that price, you could sell them at any price. Hedge funds reportedly lost billions. It wouldn't matter if you're left with half of the shares at the end. This isn't an answer to the question, this is criticism of wsb. | |
| Jan 30, 2021 at 19:06 | comment | added | Harper - Reinstate Monica | @jamesqf the X-factor is surely consoles and hardware sales. Can't download an Oculus Rift. And physical media is still popular in the console space, because it's a happy compromise between DRM and portability. Essentially this is gamers saying "We don't want what happened to electronics geeks to happen to us" (loss of Radio Shack). | |
| Jan 30, 2021 at 18:57 | comment | added | jamesqf | @Harper - Reinstate Monica: Value why? To me, one of the surprising things about this was the idea that people still bought games - or any sort of software - at brick & mortar stores. That just seems so 20th century :-) | |
| Jan 30, 2021 at 18:55 | comment | added | jamesqf | @Philipp: There's a difference between a fund technically being able to pull off that sort of squeeze, and considering it an acceptable risk. The fund would have to commit a lot of capital, while the Reddit crowd are each individually using only a small amount. | |
| Jan 30, 2021 at 18:37 | comment | added | Harper - Reinstate Monica | Gamestop does have considerable value to gamers. They just said so, in the sincerest way possible. | |
| Jan 30, 2021 at 12:24 | comment | added | Steve Jessop | Also, MelvinCap might eventually fail a margin call and declare insolvency, so it's not necessarily true that they have to buy them at some price at some time. If that happens, MelvinCap's broker is a creditor in the insolvency, but MarvinCorp isn't because MarvinCorp never lent shares to MelvinCap. That isn't what the real MelvinCap did on this occasion, of course, but shorters in general do not have unlimited money to meet their liabilities. | |
| Jan 30, 2021 at 12:09 | comment | added | Steve Jessop | @user253751: one thing I haven't seen discussed (not that I've put much effort into the search), is what stops the institutional investors in Gamestop from closing out their long positions, taking their profits, and (by doing so) allowing the shorters to close their positions. I don't think the price of Gamestop genuinely is unlimited solely as a function of how long MarvinCorp holds out, because MarvinCorp cannot own all the shares. GrammasPension owns some of them. So, MarvinCorp doesn't make this play without a model of where the limits are. | |
| Jan 30, 2021 at 0:05 | comment | added | Criticizing Israel not allowed | @SteveJessop well, you know it'll have to buy them at some price at some time, and if you have deep pockets, that price can be as high as you can afford to lock them out of. I suppose there will be reporting requirements when you get to a large percentage, which retail investors don't have because none of them individually meet the percentage. | |
| Jan 29, 2021 at 19:08 | comment | added | Steve Jessop | Note also that MarvinCorp couldn't place a single order for the whole lot at $10, because the market isn't that liquid. They have to ride the curve up. Maybe it'd look a bit like a takeover in that sense. But, if you somehow know for a fact that MelvinCap is going to have to buy stock at $400 in the near future, then the stock's worth $400. Otherwise, you're just betting that MelvinCap will do that. | |
| Jan 29, 2021 at 19:06 | comment | added | Steve Jessop | @user253751: which boils down to the questions: (a) could MarvinCorp work out that $400-ish was the right place to sell, i.e. the place at which MelvinCap breaks? (b) would it be legal for a single entity to acquire that much stock for the purposes of short-term price manipulation? | |
| Jan 29, 2021 at 18:38 | comment | added | Criticizing Israel not allowed | @MikeScott so the question is, could MarvinCorp have bought up all/most of GME at $10-ish, waited a bit for MelvinCap to "lose their shirts", and then sold it to MelvinCap at $400-ish? | |
| Jan 29, 2021 at 13:51 | comment | added | Mike Scott | @Philipp Before a hedge fund can sell shares at greatly inflated prices, it first has to buy them at very slightly less inflated prices, and then wait for the price to go up further. If the music stops between purchase and sale, then they’ve made an enormous loss. | |
| Jan 29, 2021 at 12:54 | comment | added | Philipp | That's obvious. But what matters is that while the stock is high, the hedge funds who shorted these stocks are forced to buy them at these greatly inflated prices from those who are willing to sell right now. Couldn't another hedge fund also pull this off? As the answer by @pjc50 says, the answer is yes. | |
| Jan 29, 2021 at 9:57 | history | answered | Mike Scott | CC BY-SA 4.0 |