Melvin Capital Lost 53% in January, Hurt by GameStop and Other Bets
wsj.com
wsj.com
"I keep hearing that 'most of the GME shorts have covered' — totally untrue," said Ihor Dusaniwsky, S3 managing director of predictive analytics. "In actuality the data shows that total net shares shorted hasn't moved all that much."
"While the 'value shorts' that were in GME earlier have been squeezed, most of the borrowed shares that were returned on the back of the buy to covers were shorted by new momentum shorts in the name,"
https://www.google.co.uk/amp/s/www.cnbc.com/amp/2021/01/29/g...
The volume has been so high that AFAIK, many of the original shorts could have closed out and re-sold short into the $300+ insanity (or other funds opened new short positions). That is, new short positions could even be in the money right now (at least some likely are).
Of course, another insane rush and buying spree could squeeze a short position at any price. It’s a giant game of chicken. To me, having a bearish position at $300 seems well-founded, but it certainly seems risky going against an army of people that hate you and are willing to lose a lot of money just to spite you.
It will be very interesting to see how this all unwinds.
Then, I’m going to guess most of them can afford 1 share of GME at $300 and not much more.
Doesn’t sound like a very powerful army when you break it down into reality-based numbers.
That's the part I don't understand. Other institutional investors will make money off this vindictiveness, right? It's not like they're punishing Wall Street as a collective; just the ones who have short positions.
I would be deeply surprised if retail investors were not left holding a larger proverbial bag than Wall Street as a whole.
Still, I think it’s a risky game when you have so many people willing to be irrational involved.
Everyone knows that GME will eventually crash, but the question is when. If retail is smart and coordinated about it, they can definitely cash in massively when shorts cover. They would need to keep buying which looks increasingly made difficult and monitor % short of float.
Will they succeed, idk.
I agree, if that bearish position carries finite loss potential. Buying puts is a bearish bet that could pay off or lose you what you spent on the puts. Shorting the stock is a bearish bet that leaves your downside uncapped.
Melvin Capital Recent 13F : https://sec.report/Document/0000905718-20-001111/
It shows they had about $757mm worth puts. Assuming all of that puts are worth zero, their max loss will be $757mm. GME loss would be $55mm.
Hedgefunds don't have to disclose everything? Just trying to understand how did they lose that much.
Yes 1 put contract is technically the right to sell 100 shares at the strike price of the put.