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Comment by mrh0057 | Hacker News Reader

This narrative needs to stop. This is institutional investor shorts vs intentional investors stockholders. Retail is just along for the ride but the institutional shorts did something crazy so other large funds came in like Michael Burry’s and bought large positions. This happens every once in awhile where other institutional investors see an opportunity to take out competitors who is over leverage.

So just sit back and watch for the margin calls to go out and GameStop will skyrocket to something ridiculous while the shorts try to unwind their position. Still don’t get how this mess is going to get cleaned up since it’s impossible for the shorts to cover.

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Shorting a stock 140%+ is absurd. If anything, time and technology (in this case) caught up with the old game on Wall St.

It's not any one group shorting that much. It's just that the aggregate has shorted that much.

And I'm not sure that it really matters that the shorts exceed the total stock available. Because it's not like everyone will have to cover their shorts at the exact same moment. An entity can buy stock to cover their shorts, then the entity that received the stock to cover the "uncovered" position would then be free to turn around and sell that stock again.

The real risk would be having a super large short position for a stock that has very low volume since it would be very difficult to cover lots of shorts if there aren't many people selling stock.

> Still don’t get how this mess is going to get cleaned up since it’s impossible for the shorts to cover.

A deep pocketed long term large fund can buy the short position at a discount, a bit like distressed debt, and then just wait it out. It's a guaranteed win if you have deep pockets.

Note that when they buy the position, they don't also inherit the current mark to market loss, only a part of it (the price they pay).

What is a fair price for this position? I would love to know if someone has any insight on this.

> A deep pocketed long term large fund can buy the short position at a discount, a bit like distressed debt, and then just wait it out.

They can't. Contrary to the memes peddled on reddit Illuminati aren't running the world.

But this isn't a narrative any of those institutional investors seem to believe. Michael Burry himself says that the current rally is "unnatural, insane, and dangerous", reports that he's closed his position, and is calling for legal and regulatory fixes to prevent this kind of situation from happening in the future. (https://www.bloomberg.com/news/articles/2021-01-27/michael-b...)

It is unnatural and insane. You shouldn’t be able to short a stock that much to the point to can destabilize the whole financial system. The ripple effects can be really severe because the shorts are going to lose an unbelievable amount of money and will likely be bailed out somehow due to the ripple effects.

Institutional investor and hedge funds aren't the same thing. It's my understanding that the shorts were put on by hedge funds.

As far as I know institutional investors can't short stocks.

Institutional investors are pretty much anyone who manages money on behalf of someone else. I don’t know how the restrictions work but likely has something to do with what the institution’s purpose is.

Institutional investor has become the term to refer to the opposite of retail investors.

I don't see that changing.

> This is institutional investor shorts vs intentional investors stockholders.

Source? Have you seen an update on breadth of long positions vs short positions?

Interesting! What is Burry’s involvement in this kerfuffle?

He bet on it 8 month or a year ago. saying, as always, that the financials were good.

it's not like wsb picked a stock randomly anyway

plus there was the microsoft dea.

At one point he owned around 2% of Gamestop shares so he potentially made a few hundred million dollars

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