Nine investors make $16B on GameStop stock squeeze | Hacker News Reader

Nine investors make $16B on GameStop stock squeeze

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53 pointsjbegley65 comments

This headline ignores the lesson everyone should have learned by now.... you don't instantly make or lose money in the stock market... it only happens when you open and close positions.

Since it was all buy and hold driving up the price... few sold... Billions of stock certainly weren't sold.

Your first point is very important, but your second is incorrect. Volume of trading has been very high, actually. And remember: you can't buy without someone else selling.

https://www.bloomberg.com/opinion/articles/2021-01-29/reddit...

MUST unloaded their position for over a billion: https://www.morningstar.com/news/marketwatch/20210128440/lar...

Somebody has to be selling to everyone piling in.

It’s mind boggling people don’t understand this. Profit taking is what happens when the stock price drops. We’ve yet to see that happen... but my guess is that the institutional whales will tip the scales as soon as they decide they’ve taken enough from the Reddit crowd.

There’s already a sell wall... so you know they’re gearing up.

As other commenters noted, there were a lot of shares sold that traded hands. But the important thing to look at is not shares, but how much money moved into the security, and who now holds it, and who will be in a position to keep it.

And these hedge funds that are supposedly feeling the pain. Most of them have got plenty of capital to manage this.

Think if it this way... how many billions of capital was invested by retail investors... and how many of those are “holding” in order to “stick it to the hedge funds.”

Those billions are going to go somewhere as the stock price drops.. and I’m going to guess that most of it won’t go back in the pockets of the retail investors when this all ends.

So they basically just made a bunch of rich people richer.

How can the hedge funds not being laughing?

It’s unfortunate this has come to pass. What’s also unfortunate is how much less news and hype there is as the price comes down and retail investors have now lost a ton of money.

This is a learning moment that will unfortunately go unlearned by most.

Perhaps what we need most in this country is financial education at the high school level to prevent this kind of thing happening over and over rather than relying 100% on regulation. Regulation can only be reactive, and we need to be proactive.

These are paper gains. None of these investors have closed their position. Most of them probably can’t so long as GME is part of the index they are pegged to.

This logic needs to die. People said the same about Facebook in 2011 and Amazon in 2010. Nowt saying that this is going to be the same as those, but up is up, gains are gains. This is a hugely liquid market. Someone can liquidate $1 billion of GME or hedge it without too much problems.

An index fund is constrained by its charter, not by market liquidity.

OT, but I've never seen anything autocorrected to `watthour!' Isn't it supposed to be hyphenated?

Wow, no.

Amazon and FB are massive companies, growing massively every year. They are probably overvalued, but that's due to a P/E ration problem, not a fundamentals problem.

Game Stop is straight up a flailing business, not very big to begin with.

This is a market stampede and it will come down soon.

>Game Stop is straight up a flailing business, not very big to begin with.

It was 3 months ago. Things have changed since.

There's nothing to suggest the underlying fundamentals would change. It's possible the resurgence in interest could save the company, but it's not going to turn into a growth company, and won't ever have anything near a massive valuation relative to it's baseline.

They're all in a precarious position. If they sell their shares too quickly it will pop the bubble and cause panic selling, crashing the price. They have to slowly trickle them out while generating a constant stream of HODL memes in order to not be left holding the bag.

3 of the top 4 on that list likely can’t sell at all given the way their funds are incorporated. The remainder is a member of the GameStop board who probably will unload some of it, but would almost certainly need to pre-announce that he was doing so.

The rest of the list are private individuals or hedge funds so can unload whenever they want. One of them, MUST already has.

https://money.cnn.com/quote/shareholders/shareholders.html?s...

It looks like 10% is GME is held in FDMLX, a mutual fund that tries to invest in "undervalued stocks." Since Gamestop isn't undervalued anymore, they're probably in the process of selling right now.

This just goes to show how absurd some of characterizations in the media were. eg.

Reddit's GameStop, AMC surge is the new Occupy movement https://news.ycombinator.com/item?id=25942863

This is actually a good variation of 'Occupy'. It's a 'mob protest' against Wall Street, this time by buying stocks. The upward momentum on Game Stop will collapse as surely as the tents eventually evacuated Occupy.

At least the original occupy was neutral when it comes to wealth inequality. This will likely enrich the few who got in early, at the expense of everyone else who got in late.

I mean, this is just a list of the largest institutional holders, not like, a list of people who bought out of money options and cashed in.

I got my daughter to buy one GME share in her account using her money. We closed at $130 giving her a profit of $40, easily paying for her copy of Minecraft she wanted.

I don't think there was any valuable lesson in this for her or us, just a bit of fun. We are trying to teach her about gains in the long term, i.e. reality.

better teach her about gains over 5-10 years, not gambling on single stocks

Why not both. There’s value to learning to take calculated risk. If you put a tiny sum where you are okay loosing to make a quick buck and have a decent model of probability, it works out.

Wait, she could also have bought the Minecraft copy with the trade money without the risk of loosing it...

I wonder if the entire process was "astro-turfed", as in agitators were placed in the right place, right time with the right messaging to generate a mass delusion.

That would be fascinating to untangle, just as a psychological experiment and its results.

That was my initial reaction when i first saw the reddit threads started popping out. However, I have come to deeply regret my fear of being manipulated, because I could have gotten in very early.

You might think IBD would understand the difference between realized and unrealized gains. And that it was reporting on very stale data.

This story is ridiculous. Like everyone else has said, these are paper gains to (mostly) institutional investors.

Can someone explain how more than 100% of the float can be shorted? How is this even legal?

Pretty misleading considering that they’re all institutions except for Ryan Cohen which I believe is also not a private stake.

Question for those familiar with the industry: What actually are these large investors in GME doing right now? Like, suppose you're some investment manager at Blackrock. Is that even the title that'd be responding to this? Would there be escalations going up to some VP? Is there some a team figuring out an exit strategy?

And a whole bunch of guys on WSB made a killing too

The actual squeeze hasn't started yet.

I’ve been surprised to have seen this kind of comment here at HN more and more this week. The specific claim in this comment is one that is being made at /r/wallstreetbets, among many others. Over there, users seem to delight in repeating statements like this and not providing any supporting evidence or adding their own arguments. I think being an echo chamber is meant to be part of the fun of that subreddit at this moment.

But why do this on HN also? I can only guess that the users here are personally invested in GME and are hoping to increase their own profits by spreading the word and convincing more investors to join in with them. If this is the case, it seems to be at odds with how Hacker News is generally used and I am surprised to see it being tolerated so much by the administrators.

> I can only guess that the users here are personally invested in GME

bingo

I'm the original commenter. I don't have any of the shorted stocks. I only find the story fascinating. ¯\_(ツ)_/¯

Because it's technically true? Regardless if it's likely to happen or not the actual squeeze - the closing of shorts when there's no available stock to buy - hasn't happened (and maybe never will) yet.

That's not something you can know for certain. It's possible that hedge funds closed their early shorts, but now, the mind-boggling valuation has inspired a wave of new shorts.

> But why do this on HN also?

I have never seen HN comments get as bad as the past few days. There have been multiple 1000+ comment threads. I've seen oodles of comments that are just sentence fragments barely more coherent than "to the moon". Righteous fury and conspiracy theories abound. This has clearly struck a nerve and bridged the gap between HN and reddit more than ever before.

I've been in and out of this site for many, many years now. I came back a few months ago, having been away for quite a while. It was noticeably different even then. At that time, it was all about the US political situation. It's not necessarily that the focus has become more political — although it undoubtedly has — it's more that the comments are skewing more towards memes and triviality. Sad to see; let's hope it's just a phase.

I was surprised at these narratives being repeated so many times here with only a few people refuting them:

* GME was illegally shorted 140%, maybe by one company, and a stock being shorted 140% is somehow intrinsically bad/evil/shady. None of this really seems to be the case regardless of the utility.

* GameStop was being driven to bankruptcy by hedge funds shorting it. I'm not sure what the logic is here.

These narratives almost seemed designed to rationalize the manufacture of a short squeeze; something the SEC seemingly has some strong opinions about.

The populism here on HN has been indeed disturbing, what with nobody willing to look at it from anything other than the lens of 'Robin Hood Fury'.

People talking in terms of 'shorts', 'positions', 'rights to buy' etc. or any kind of analysis, are missing the point - mostly what is happening here is straight up mania on a stock.

This is a study in memes not markets.

Since people can't bitch about politics on HN, RH gives them an avenue to vent.

> I am surprised to see it being tolerated so much by the administrators.

I think its been a tough month for the administrators and they're more interested in policing more... serious... politics that keep coming up around here.

Standard "HODL" or "Bitcoin hype" has been around Hacker News for a while. Hell: remember that this site is ultimately owned by YCombinator, a venture capitalist group. Hyping $$$ talk is tolerated a bit more around here not necessarily because the admins agree with it... but because its adjacent to what they do.

Right now everything is speculation, nobody knows anything during the rally as the shares don't point to who owns what and who is shorting. So if anyone says the squeeze hasn't happened yet, it just their opinion.

For all we know the hedgefunds got out of their short positions and retail is pumping the stock higher. Or conversely hedgefunds are still short and waiting for the rally to fizzle until it collapses and then they reap huge gains.

Or it could explode higher like this week(the big squeeze), the point is nobody knows with any certainty what will happen. I never thought tesla in a million years would be a $800B company but I and many like me have been proven wrong. its whats great about investing, there are always surprises all the time.

Sorry, I should have backed up my statement. Apparently, most hedge funds are actually doubling down on their short positions, believing people who are holding will sell. GME is still shorted more than 100%, so it's basically a game of chicken between short and long gamers.

The problem is the shorts have to pay interest, so they need an out ASAP, while the sentiment of the longs is that they will hold indefinitely.

Disclaimer: I'm not a financial advisor, and I don't even have any of the shorted stocks. I'm just following the news.

That’s my understanding too. Although most places don’t have cited data. How do I check how much of a stock is shorted, and what’s their deadline.

I imagine that once the hedge funds are forced to buy, the holders will dump it and they’ll be a sell rally on r/wsb. That will be the bubble burst.

But like anything else, there’s so much vested conflict of interest, it’s hard to know who to trust.

wouldn't it be a squeeze every time a short position has to be closed out?

None of them are selling. This is just silly clickbait.

False. Must already sold - https://www.marketwatch.com/story/large-gamestop-shareholder...

Next week: "Nine Investors Instantly Lose $16B on GameStop Stock 'Collapse'"

Loss porn is a thing. WSB loves losing money.

It is fun seeing other people lose money

Schadenfreude, making me feel glad that I'm not you. https://www.youtube.com/watch?v=nCQGQ5qBQTA

Guh

https://www.reddit.com/r/OutOfTheLoop/comments/dyaj4v/whats_...

More like "A disturbance was felt in the force as if 500 thousand investors all cried out 'YOLO' before discovering their GameStop stocks are worthless after giving all their money to 9 other investors."

April 1, 2021 - Gamestop announces intention to acquire Apple

edit: Jesus folks, this is obviously a joke. Lighten up HN!

That's unrealistic of course, but I do wonder what GME's CEO is doing right now. Could they use the current high stock value to pay off debt by selling off stock or would that potentially collapse the current market value. Is there some way for them to take advantage of this whole thing?

GME is not really profiting or having a direct access to more money unless they issue more stock which is not so easy and unlikely. The ceo has made money as he certainly has stock but that's his personal holdings.

Well at the very least, you have to assume full-time salaried employees have some sort of equity compensation. So this is basically an awesome lottery outcome for them. Hopefully they give the hourly employees some sort of nice reward for sticking around too.

I don't see big opportunities to restructure the business - if the executive team could build a better business, they wouldn't be in this shape to begin with.

February 1, 2021: GameStop starts preorder of KFC Gaming Consoles.

Is anyone on HN here holding GME shares? Today I said fuck it and bought 75 shares and put a sell limit of $1320. If it fills I will make a clean $78k worth of profit. If it goes to zero I lose about $20k.

What made you decide to jump in at this point?

If I had a time machine I can imagine jumping in last week, or last month, but I feel like I've missed this bubble and it could pop any moment.

Don’t care if it pops, I’m doing my part.

Yep, holding on to 120 shares, bought at 61.20. A bit late into the game.

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