Quote from: teestub on January 27, 2021, 09:06:45 amWas just reading about how they are in the process of bankrupting a hedge fund that was betting against Game Stop, crazy shit https://mobile.twitter.com/williamlegate/status/1354166397874671616It's been interesting watching this unfold. Although I don't think Melvin is going to go bankrupt as it looks like Citadel and Point 72 are going to bail it out. https://www.institutionalinvestor.com/article/b1q8swwwtgr7nt/Buried-in-Reddit-the-Seeds-of-Melvin-Capital-s-Crisis
Was just reading about how they are in the process of bankrupting a hedge fund that was betting against Game Stop, crazy shit https://mobile.twitter.com/williamlegate/status/1354166397874671616
Quote from: Jerry Morefat on January 27, 2021, 09:34:17 amQuote from: teestub on January 27, 2021, 09:06:45 amWas just reading about how they are in the process of bankrupting a hedge fund that was betting against Game Stop, crazy shit https://mobile.twitter.com/williamlegate/status/1354166397874671616It's been interesting watching this unfold. Although I don't think Melvin is going to go bankrupt as it looks like Citadel and Point 72 are going to bail it out. https://www.institutionalinvestor.com/article/b1q8swwwtgr7nt/Buried-in-Reddit-the-Seeds-of-Melvin-Capital-s-CrisisFront page news on the FT today. Interesting stuff.
Maybe slightly off topic but what platforms are people using? I have so far stuck to the usual biggies (HL, II, IG) just because they are known beasts. Have people tried the zero commission/fee sites such as e-toro, trading 212 etc? Are the spreads acceptable? Any other issues to consider?
Quote from: Jerry Morefat on January 27, 2021, 09:34:17 amQuote from: teestub on January 27, 2021, 09:06:45 amWas just reading about how they are in the process of bankrupting a hedge fund that was betting against Game Stop, crazy shit https://mobile.twitter.com/williamlegate/status/1354166397874671616It's been interesting watching this unfold. Although I don't think Melvin is going to go bankrupt as it looks like Citadel and Point 72 are going to bail it out. https://www.institutionalinvestor.com/article/b1q8swwwtgr7nt/Buried-in-Reddit-the-Seeds-of-Melvin-Capital-s-CrisisNot sure what to make of all this in terms of the morality of it. However, if this were happening in the UK I'm pretty sure the people involved on reddit would be committing an offence under the Market Abuse Regime, specifically around undertaking manipulating transactions.In fact MAR 1.6.5 provides guidance around whether a person had legitimate reasons for their behaviour. One of the indications that the behaviour is not is "if the person has another, illegitimate, reason behind the transactions, bid or order to trade". And I reckon "I wanted to bankrupt another market participant" would probably fairly easily pass that test as being illegitimate. Will be interesting to see the fallout. I've no idea whether the same rules apply in the US.
Surely shorting more stock than is available is illegal?
Haha don't worry I'm not worrying about the poor little hedge fund managers It's more the wider argument they seem to be trying to make; that it's okay to manipulate the stock market if you believe your reasons are noble. And basically, it's not okay. We have rules to prevent market manipulation for a reason, one of those being there will always be people who've lost out unfairly, and it won't just be the hedge fund. I'd be willing to bet there will be a large number of people who joined the pile in too late and are now sitting on massive losses given the way the price has plummeted so far today.If the hedge fund did go bust, chances are in order to take out it's short position it'll have borrowed stock from institutions, including pension funds. With the hedge fund bust, those funds would then lose out in turn, meaning this could have ended with a loss to who knows how many people's pensions. On the flip side I'm not saying what the hedge funds do is right (or wrong actually). Just there are lots of issues around it and it's not as simple as laughing at a hedge fund manager losing their shirt.
Is it not possible to have >100% short interest without naked shorting?E.g. A owns 1 stock. B borrows the stock from A and sells in the market to C (normal short). C now owns 1 stock. D borrows the stock from C and sells in the market to E. AEC are all long and B and D are short, giving 200% short interest, but B and D both borrowed stock before selling so not a naked short. A touch confusing so not sure if I'm right
Quote from: Bradders on January 27, 2021, 05:46:14 pmHaha don't worry I'm not worrying about the poor little hedge fund managers It's more the wider argument they seem to be trying to make; that it's okay to manipulate the stock market if you believe your reasons are noble. And basically, it's not okay. We have rules to prevent market manipulation for a reason, one of those being there will always be people who've lost out unfairly, and it won't just be the hedge fund. I'd be willing to bet there will be a large number of people who joined the pile in too late and are now sitting on massive losses given the way the price has plummeted so far today.If the hedge fund did go bust, chances are in order to take out it's short position it'll have borrowed stock from institutions, including pension funds. With the hedge fund bust, those funds would then lose out in turn, meaning this could have ended with a loss to who knows how many people's pensions. On the flip side I'm not saying what the hedge funds do is right (or wrong actually). Just there are lots of issues around it and it's not as simple as laughing at a hedge fund manager losing their shirt.They're not all cunts. One particular chap who has just entered my radar gave away £177m in 2018, bought / donated 100 SAMBA II covid testing machines last year, donates to Extinction Rebellion, drives a Prius and goes to work on the tube with his sandwiches in a lunchbox.
And I reckon "I wanted to bankrupt another market participant" would probably fairly easily pass that test as being illegitimate.
But what about the stuff that he does that he doesn't want you to know about?
Quote from: Bradders on January 27, 2021, 04:33:16 pmAnd I reckon "I wanted to bankrupt another market participant" would probably fairly easily pass that test as being illegitimate. I think the main driver is to make some rocket money.