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No. of Recommendations: 1
Are you following the meteoric rise of certain stocks recently and if so:
I find it amusing.
I am not following it as it does not effect me.
I am concerned about it.
I am scared by it

Click here to see results so far.

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Thanks for your input. I voted that I was amused by it, but in reality I had all four emotions to some extent.

And GME today? Down 55% today. AMC is down 60%.

The hedge funds that were short got a huge lesson and at least some of those who squeezed them are now getting a lesson of their own.
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It is a shame, the retail investors are forced out of the trade by Robinhood and IB. IF hedge funds can drive companies to bankruptcy by shorting, why not retail squeeze those shorts??
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I am both highly amused and deeply concerned.

Seeing the wall street snots get a sharp kick in their shorts was beyond amusing, it was righteous. Can the people retake control and ownership of capital markets and run them for the benefit of all? Hmmm.

Seeing the degree of nihilistic energy behind the Reddit attack, on top of the political and factual nihilism of our time as we face GCC, more pandemics, and religious fundamentalisms dribbling out of every orifice is a real cause of concern.

David fb
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Well let me help in a translation that might help you understand why they did what they did.

When you hear, "We had to protect the integrity of the market" think "We had to protect ourselves" and I will add that I do not blame.

The number of market intermediaries that could lose money when stocks like GME, AMC, Koss, etc., came back to earth would be quiet large. For Robinhood users the top of list would include Robinhood Inc. and Apex Holdings which is the clearing house for Robinhood. I believe that it was Apex that shut things down potential buyers of GME using Robinhood.
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David fb,

One of the best quotes that I heard went something like this, "I think the chance of a bunch of small investors on a message board sending these stocks up like this is about as likely as a guy in a horned Viking helmet was responsible for the capital sacking."

His point was that there were more sophisticated groups behind both of these. I agree.

I was once the lead plaintiff in a couple of class action suits against a REIT called Captec Net Lease. There was a yahoo message board at the center of it all, BUT it was a hedge fund manager and professional real estate investor that got me linked up to the securities lawyer.
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Valuemongeragain

Thank you! A key insight into what was happening structurally, and a valuable reminder about the complex layering of the increasing disorders.


David fb
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"We had to protect the integrity of the market" think "We had to protect ourselves"

RH didn't have sufficient capital required by the clearing houses. So they forced their customers to stop trading and liquidate their positions.
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No. of Recommendations: 7
I found that the most amusing part of the saga so far is that the holders of the $600MM AMC 2.95% convertible notes due 2026 chose to convert at a price of $13.51 when the price of AMC was at $19.90 But the conversion wasn't immediate - it's taking a few days to settle. So, instead of being up nearly 50%, based on Thursday's closing price of $8.63, they are down 36% https://www.msn.com/en-us/money/topstocks/investors-that-con...

For AMC, it wiped $600MM of debt off of their balance sheet, and will save them $17.7MM/year in interest - possibly staving off bankruptcy for a while longer.

AJ
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in the old days they used to call this pump and dump.
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AJ,

Fascinating! Kind of like AMC did an IPO.
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So, instead of being up nearly 50%, based on Thursday's closing price of $8.63, they are down 36%

Most likely they have shorted AMC at above $13.5 and going to settle the trade with their shares. When 100's of millions are involved they will not be making these kind of rookie mistakes.
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Most likely they have shorted AMC at above $13.5 and going to settle the trade with their shares. When 100's of millions are involved they will not be making these kind of rookie mistakes.

Maybe. Or maybe they were just trying to monetize a private placement debt investment that they didn't expect to get back completely, since the outlook for movie theatres has changed significantly (you know - pandemic and all). Maybe they figured even if the price dropped below the $13.51, they would still get more than they would in a bankruptcy, and they'd get it out now, instead of having to wait until 2026 to be given equity in a a post BK company.

AJ
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According to CNBC, RH is now limiting purchases on lots of stocks including some less speculative plays like AMD and SBUX. They are limiting purchases to 1 share on these and other stocks, again some less speculative players. Sounds like RH is having major liquidity issues.

If RH goes kaput, does the zero commission model continue? Probably yes (I think), but trading costs could very well go up for many of us.

I've called in my limit purchase orders and made one major sale today.

Maybe things will smooth out, but things could also get quite rocky.

At least across the broader market RH is a relatively minor player - I think/hope!
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Clearly, RH is having issues with the clearing house, which is due to liquidity issues. BTW, it is not just RH, today interactive brokers sent me multiple alerts and reminding me take profits on my options and close the position, warning due to market volatility, after hour price could trigger assignment etc.

Even though I have over $150K maintenance margin and none of my options are within 10% of getting called or assigned.

This week we have seen significant deterioration. I need to do some thinking over the weekend, and book some profits and raise cash. The market is showing lots of strain.
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Well it looks like the show, at least the short squeeze show, is pretty much over.

GME the most well known of the short squeezes was down $135 a share, or 60%, today to $90. It hit a high of $483 on Thursday.

AMS was down $5.48 today, or 41.2%, to $7.82. It hit a high of $20.36 on Wednesday.

KOSS was down $15 today, or 42.86%, to $20. It hit a high of $127.45 on Thursday.

BGS was down $4.97 today, or 13.31%, to $32.36. It hit a high of $47.86 on Wednesday.

I put an order to repurchase the BGS shares I sold early last week, below $30. May not hit. In retrospect I should have sold my BGS shares in my taxable account above $40 and just paid the tax.

I am writing a book on investing for my son. I have a small section on crowded trades. A GME short position when short interest was above 100% was a crowded trade, but so was the trade owning GME short positions above $200 whether those positions were calls or actually owning shares.

Schwab updates its short data each weekend giving the short position as of Friday's close - I think? Last week it showed the GME short position at 105% while multiple reports last week at 130-140%. Some shorts got crushed, but so did those squeezing them.

Schwab showed BGS's short position last week at 35.5% and today it is shown at 36.0%. BGS's earning estimate for 2021 is $2.37 or 13.65x at today's close and its current yield at today's closing price is 5.87%. It also repurchased a fair amount of stock in 2019 and barring unforeseen issues should be repurchasing in 2021.
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Well it looks like the show, at least the short squeeze show, is pretty much over.

GME which was trading at $5 and moved up to $10, is still trading at 9x; The silver diversion is a great game whoever orchestrated, that along with trading ban's, restrictions the momentum on the squeeze is stopped. I am not yet ready to call this is over.
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