weirdness happening in US company

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Forums › Finance and wealth management › weirdness happening in US company

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#2646077 2-Feb-2021 18:18

Kyanar:

It gets even more interesting - SEC filings seem to indicate that institutions (Vanguard, BlackRock, pension funds, etc) may own 162% of the company!

GME Institutional Ownership - GameStop Corp. Stock (fintel.io)

If this is not a miscalculation (it doesn't appear so - the last annual report said there was 87m shares of stock on issue, and no sign of a share issue in that timeline) then something very illegal has occurred, and since the float is then a negative number - the stock interest may be even worse than originally thought!

Is it illegal though? (assuming that it's true).

You contract to "borrow" a share when shorting that confers most (if not practically all) rights.

You lend that share to someone else. That's "two shares" counted as shorted - even though it's only the one share.

It's incredibly stupid and irresponsible greedy behaviour, but may not be illegal if you can cover the risk some way (even if it should be - the regulators need to look at "shorting" stock in companies in trouble - at best it accelerates their demise).

Loismustdye

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#2646096 2-Feb-2021 20:09

I see now also that Sharsies will now only accept sell orders on GME and AMC as their broker won’t accept any buy orders, gets more interesting every day.

CYaBro

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#2646209 2-Feb-2021 21:31

Loismustdye:
I see now also that Sharsies will now only accept sell orders on GME and AMC as their broker won’t accept any buy orders, gets more interesting every day.

Any platform that uses Drivewealth, who are owned by point72.
Strangely enough point72, along with Citadel, just “invested” in Melvin Capital Management, who is the hedge fund that is behind the GameStop stock shorts.

Opinions are my own and not the views of my employer.

Scott3

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#2646213 2-Feb-2021 21:58

CYaBro:

Any platform that uses Drivewealth, who are owned by point72.
Strangely enough point72, along with Citadel, just “invested” in Melvin Capital Management, who is the hedge fund that is behind the GameStop stock shorts.

Takes down Sharsies, Hatch and stake.

Anybody know who Tiger and Revolut use as their US broker?

Batman

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#2646214 2-Feb-2021 22:01

you'd think that someone will start a trading facility just for this

Kyanar

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#2646228 2-Feb-2021 22:45

Fred99:

Is it illegal though? (assuming that it's true).

You contract to "borrow" a share when shorting that confers most (if not practically all) rights.

You lend that share to someone else. That's "two shares" counted as shorted - even though it's only the one share.

It's incredibly stupid and irresponsible greedy behaviour, but may not be illegal if you can cover the risk some way (even if it should be - the regulators need to look at "shorting" stock in companies in trouble - at best it accelerates their demise).

Very much so. Institutional investors hold their shares, usually passively in a fund (GME was part of the S&P Small Cap Index). You're also forgetting that shorting where you do not actually have a share to sell is illegal unless you are a Market Maker. Citadel can naked short, Melvin cannot. Remember, without approval from the client, a fully paid security in a cash account cannot be loaned out. Margin, yes. Fractionals (or rather, the broker's share that the fractionals come from) yes. With approval, yes. Most major brokers, however, do not opt in customers by default. I know my shares with Schwab cannot be lent. Same with shares through Pershing and the like (with Commbank/ASB).

Scott3:

Takes down Sharsies, Hatch and stake.

Anybody know who Tiger and Revolut use as their US broker?

Revolut is DriveWealth. Tiger self-clears, but Interactive Brokers are their major shareholder, and Interactive Brokers despise retail clients (their CEO made that very clear in an interview with CNBC. He thinks short squeezing should be illegal when done by retail customers. Not institutional though. It's OK then).

Batman

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#2646309 3-Feb-2021 09:21

Apparently shares are falling now?

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Trade NZ and US shares and funds with Sharesies (affiliate link).

BlinkyBill

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#2646326 3-Feb-2021 09:43

Batman: Apparently shares are falling now?

Did you think they were going to stay up?

Batman

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#2646336 3-Feb-2021 09:58

BlinkyBill:
Batman: Apparently shares are falling now?

Did you think they were going to stay up?

Who knows. It depended on how much fire the redditers had left.

BlinkyBill

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#2646347 3-Feb-2021 10:13

Batman:
BlinkyBill:

Did you think they were going to stay up?

Who knows. It depended on how much fire the redditers had left.

no it doesn’t. It depends on how the company performs in business. This whole saga is temporary and those who bought outside of a realistic valuation are going to lose money.

Beccara

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#2646350 3-Feb-2021 10:16

Batman: Apparently shares are falling now?

Opened down 50+%

Most problems are the result of previous solutions...

All comment's I make are my own personal opinion and do not in any way, shape or form reflect the views of current or former employers unless specifically stated

Kyanar

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#2646474 3-Feb-2021 15:22

BlinkyBill:

no it doesn’t. It depends on how the company performs in business. This whole saga is temporary and those who bought outside of a realistic valuation are going to lose money.

No it doesn't. Short squeezes are irrational market movements, and disconnect price movements completely from the fundamentals of the business, replacing them instead with the economic fundamentals of supply and demand. As long as shares are in high demand and short supply, prices can still go up regardless of the company's underlying performance.

frankv

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#2646503 3-Feb-2021 16:03

Fred99:

It's incredibly stupid and irresponsible greedy behaviour,

Shades of the Crimson Permanent Assurance....

wellygary

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#2646513 3-Feb-2021 16:30

Beccara:

Batman: Apparently shares are falling now?

Opened down 50%

Closed at 90 today, and has continued to drift lower in After hours....

The Media need to stop running stories of "Kids with 2 shares in XYZ selling then for X $1000" because anyone who bought GME lass than a week ago is sitting on some impressive losses, ( ~$350 down to $90)... a lot of small investors are going to feel very angry and betrayed.....

BlinkyBill

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#2646521 3-Feb-2021 16:39

Kyanar:

BlinkyBill:

no it doesn’t. It depends on how the company performs in business. This whole saga is temporary and those who bought outside of a realistic valuation are going to lose money.

No it doesn't. Short squeezes are irrational market movements, and disconnect price movements completely from the fundamentals of the business, replacing them instead with the economic fundamentals of supply and demand. As long as shares are in high demand and short supply, prices can still go up regardless of the company's underlying performance.

Do you want to bet $10,000 that the share price in six months will be the same or less than it was six months ago?

Disclaimer: before I make that bet I need to check the pricing six months ago, and company fundamentals.

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