Hacker News Reader

Comment by sirffuzzylogik | Hacker News Reader

Citadel and Point72 stepped in and closed the hedge fund position ($3 billion) on GME [1]. The regulators are not moving/commenting just yet, I am curious to see the repercussions of this and if Reddit crashing the markets it the new norm.

[1] https://www.cnbc.com/2021/01/27/hedge-fund-targeted-by-reddi...

EDIT: My bad, the hedge fund was not closed, just its GME short position. I amended this.

View on HN

> [Melvin Capital] was also closed by its owner, Citadel

No. It closed out its GME short. It then got a bailout from Point72 (f/k/a SAC) and Citadel. To my knowledge, the latter and Melvin are not affiliated.

> Reddit crashing the markets

Source on that? Even at this prices GME is ~$20b market cap in an exchange that represents ~$25t in market cap. I don't know that it really poses a systemic risk to anyone who didn't take out insanely risky short positions on the company in the first place

No, that article says it closed out of its position in GME. It hasn't closed.

The short interest is still over 100% and unless they offloaded it into another institutional investor it is simply not possible.

It's possible that they simple moved the positions to P72 or Cit's books so they could claim they no longer hold the position. The intent would be to encourage retailers to declare victory and sell. IANAL so I could be off, but if it were legal, it is definitely plausible.

I'm pretty sure Citadel isn't an owner, but rather, is able to get a cheap position in the hedge fund, thanks to the short term irrationality.

Reply on news.ycombinator.com