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Comment by lordnacho | Hacker News Reader

As a former fund manager, I think it mainly illuminates bad risk management practices at one specific fund. Why would you ever paint yourself in a corner where you lose 30% on a single name? It just makes me think all their other bets are also huge and simply lucky they haven't collapsed.

Funds are also diverse, though. There will be a load of funds who have taken the other side to Melvin, based either on various fundamental insights, or technical, whatever.

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30% has not been lost on a single name. It's publicly available information that every known short by the fund (particularly those with high short interest) is now being targeted, and is up tens to hundreds of percent in the past couple of days.

Fair enough, I hadn't considered I might be reading a skewed view of what the PnL distribution was. However it's still not a great look that the firm can be put in such a position. It's not actually an excuse that events are unprecedented.

Thanks for your input. I've worked during such crises myself and it's stressful.

Yeah I'd like to caution that approximately everything reported about this is basically incorrect, even from reputable media. That includes PnL stuff but equally applies to...well, all the other stuff. I can't even count the number of conspiracies I've seen repeated.

I get that hedge funds are categorically unsympathetic characters in this play. But people are so angry that fact checking doesn't seem to matter. It doesn't help that a lot of things financial mechanics are esoteric and not commonly known, or that most people don't know the difference between hedge funds, banks, market makers and brokers.

Do you think the move is actually powered by the WSB soccer moms, or is it other funds pushing?

I think it's moved on to incorporate substantial institutional weight at this point as well. Without going into specifics, that becomes clear if you compare stocks which rocketed up in the past few days with stock tickers mentioned in WSB posts, and select for those in the former group which don't appear in the latter.

Success often comes down to execution of the play. If your building something it's about quality. If your making a bet, then it's about risks.

This fund has/had bad risk managers.

Or they had ordinary risk managers whose ordinary schemes got attention from an internet forum with just enough ability to counter one of them.

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