26 Burst results for "Melvin Capital"
"melvin capital" Discussed on Bloomberg Radio New York
"You That's a Bloomberg business flash Tom and Paul Karen thanks so much Here's the math Paul Sweden is going to bring in our next guest You have a management fee and like 3% as a field goal 1% is stick and now less than 1% is typical where it's like half a percent or 50 basis points et cetera The hedge fund world is different There you get paid 2% and you get 20% of whatever the total return is over a given hurdle rate Like if you make 8% everything already you get 20% If you go down Paul you have a market drawdown and you can calculate to the penny over a beverage of your choice at 5 p.m. how much you have to make back to start getting your 20% payout again And you say why are we doing this Why are we doing this The 2% A lot of that going on There's a lot of that going on because we've got markets down big time and we've got a really high profile hedge fund Why don't you make guests that they are closing their doors Melvin capital this is guy gay plotkin He had about an $8 billion hedge fund shutting down They got crushed last year on some of these meme stocks Let's bring in Chennai bastards She follows all things Wall Street for Bloomberg news and she joins us here in our Bloomberg studio So finale what's happening to the good folks at Melvin capital A very simply they are winding down They're returning money to investors They try to figure out a reboot plan but they had lost too much money I mean they're down more than 20% in the first four months of the year And remember last year they lost a lot of money Yes in that GameStop route This is really the GameStop the poster child And this was a bunch of retail traders bidding up the stock a lot of the hedge funds the quote unquote smart money was short they got crushed And remember gay plotkin used to work for Steve Cohen is kind of a known as a genius and shorting even in tough even in good times He was making a lot of money in the bull market shorting stocks and now because he had publicly said that he was not going to be shorting to that degree anymore he was not really doing that same strategy coming into this year which in theory could have made him Well is Bobby excellent shutting down That's an ask Bobby axelrod You will Damien would love to have a moment with you but seriously we see it on billions And that's all great and that but this is not one guy You're gonna laugh Industry imploding A little bit because I was having that old school Bobby van steak dinner last night Oh there you go Hey you know and everyone was joking Did you order a decaf park In order to decaf coffee I had one glass of wine Tom But you know the joke here is that yes I mean this is bad times but it's worse for a lot of worse for some than others So I do want to point attention to the Tiger clubs here Mister Robertson's offspring Exactly His offspring remember chase Coleman was one of the most famous at the offspring He had ran Tiger global that really got started in the wake of the dot com bust really finding cheaper technology companies that had sold off And now if you look there down about 44% in the first four months of the year that's a $17 billion loss And the question now is can a firm like that claw their way out of it some of their investors are really holding on tight and believing in it but you gotta wonder is Gabe plot get alone as some of these hedge funds started Okay but jump in here Paul with Chanel She already knows the story and you know the numbers It's simple as I can is anybody made money in hedge funds over the last three years or 5 years Versus the Vanguard standard Boris fund Yes is the answer There's definitely been some performance I personally this is just a personal analysis When I looked at the long short equity hedge fund which is what a lot of sell side animals would go to as I left a south side looking for greater riches My conclusion in 2004 5 6 was the game was over Over I would never pay two and 20 for long short equity There's just not enough alpha out there And I think we see that in the numbers every year And if I were a hedge fund investor I know that when a markets go up I'm not going to go up in line with the S&P because I'm quote unquote hedge but when the markets go down I don't want to go down as much as the market We don't see that in long term And some funds are doing very well this year His value strategy is actually paying off this year after this tight with John boggled Does he just own the Vanguard you know S&P fund No These are the quants over at AQR They're machines are turning And this year they're doing very well And he's done a lot of presentations with investors where he showed you the dispersion between stocks that are so called value stocks and so called growth stocks Versus expensive The other kinds of funds that are doing well this year Tom commodity hedge funds are up 20% in a year Sure And a macro funds are also doing very well but where will they be I just don't get the three or 5 year thing You know the other thing that's interesting is a lot of these funds use leverage The cost of leverage is going up Well the thing is this is actually not a small item Yeah not at all a small item because if you are depending on leverage and the cost of leverage is going up how much does this strategy work How much are they leveraged They're not leveraged two to one They're like about four to one 8 to one like some serious Sometimes more yeah sometimes a lot more And it depends on if what you're buying especially if you did I don't mean to drop God Some of the easy trades the spac trade The stack arbitrage is called kind of a lazy trade on Wall Street these days That's sell off They return the money to investors if they don't find a deal That's again you're pretty much dead If they do die As they die If feels like it boy 'cause again when I first thought about life can you see exactly a spac to me is a great investor like a Doctor John Malone Do you want to raise some money to put it to work in TMT Okay John I'll give you money because you're a proven investor but do I give it to Jay-Z or a rod Taylor amber mason went over from Bobby's shop over to cliff as can you get would you talk to Taylor and mason She's got some insight there.
"melvin capital" Discussed on Bloomberg Radio New York
"For our crypto report And it's been a brutal market sell off in digital currencies Bloomberg's finale Bassett with us but we thought we get into digital assets to ask you about Melvin capital management's plan to wind down Yeah truly add remember this is an amazing scoop by Bloomberg's hammer parmar Gabe plotkin really the poster child here of that GameStop short squeeze Even after recouping some of the losses that he had in early 2021 is now down again for the year and telling investors that he is returning money and winding down funds Remember this is right after he initially tried to reboot the fund in a different fashion scrap those plans and now remember I've got to say Wall Street for a while now has been expecting some casualties in the hedge fund industry and it starts here with Melbourne capital All right Charlie give me a quick update on the markets in the world of cryptocurrencies as well Yeah absolutely Something interesting here Ed is that even though you saw that brutal sell off today in the market more largely especially in the NASDAQ 100 with a 5% sell off you're actually seeing Bitcoin even though it's trading below that 30% level only falling about 3% over a 24 hour period So not selling off as steeply as the market you are seeing it also holds steady as opposed to other coins Altcoins in this downturn So when you look at Bitcoin to what extent is it the relative safe haven compared to the other crypto assets All right thanks naughty Stay with us Let's bring in our next guest honey rush one who's the cofounder and CEO of 21 shares of crypto exchange traded products issuer There's been making waves in Europe for the past four years and it's now marking its U.S. entrance with the launch of two new funds simple question to start with honey Why is the U.S. okay with ATPs but not ETFs So thank you for having me I'm really excited to talk about our launch into the U.S. market We're launching private funds today So we're not yet launching ETFs or ATPs We are working on an ETF in America and that's public as well But nothing has been announced yet on that we're still working very very closely with the regulators on all of that Why is it that this is the time to launch new products in a down market especially when there's a lot of questions about how comfortable institutions will get with these types of products in such a downturn So there are a couple of reasons When we first launched in 2018 the world's first physically backed ETP which was the first crypto ETF on the Swiss stock exchange It was a bear market And I remember that the initial seat capital of 5 million went down to three and a half two days later It turns out that building during bear markets if you're focused on the long term ends up being a pretty good bet The other way of looking at this is nothing fundamental has changed with any of the underlying technologies And we're seeing this across the board both across every crypto asset as well as more institutional investor interest One of the things that should be very very comforting is that despite the market sell off and what happened with the Tara ecosystem last week we only saw a couple of days of outflows and we've seen consistent inflows today yesterday the day before and Friday as well While you're on it how does what happened last week I guess more than a week ago now the Tara breakdown really draw into question the broader crypto ecosystem And the place of other coins stablecoins in the ecosystem So we had the world's largest Luna Terra ETF which was listed on the European exchanges including Switzerland So we've been following this very very closely On the product itself considering that Luna is now operating intermittently we've obviously suspended quoting the product However there seems to be a potential rescue plan And we'll keep that up and running while we monitor that I think it's important to just take a step back and really look at Tara as what it was which was a grand experiment that was supported by some of the world's largest and most notable investors both in the crypto space and in the traditional financial space to try and build an algorithmic stablecoin How they succeeded which obviously they did not It would have had huge positive ripple effects And so it was a worthy experiment to run that built a vibrant ecosystem with a lot of risks And our research has shown that the risk for there as well as the opportunity Honey we see on our screens you're in Florence Italy Lovely That's a wonderful place In the heartland of the European Union talk to me about the regulatory landscape the difference between doing business in Europe versus the U.S. your experience of launching these products in each market It's different geography by geography What regulators are looking for and what populations are looking for can be different We just launched Australia's first Bitcoin and Ethereum ETFs And that was due to answering very very different questions than we have in Europe both in the EU and in Switzerland where we are active Switzerland jumped ahead of the pack by trying to create a crypto nation And so we've been very very supported from the beginning out of our Zürich base But as the asset class has become too big to ignore other regulators around the continent and actually around the world.
"melvin capital" Discussed on Bloomberg Radio New York
"And not to get too Bond geeky at this point in time That's well above That's well above the terminal rate expectations of the fed at this point in time So when you think about the marketplace and where we are investors need to rationalize that level I'm going to cut to the chase I have a student with all he's done for pimco Turn it around assets larger than when gross was there et cetera The harder your call was a reticence on owning bonds throughout the Bond bull market You said someday this is going to end it's ended when do you go long bonds When can you extend duration Well you have to think about the purpose of bonds as a duet effectively You have capital appreciation or depreciation which capital appreciation plus carry an income And that carrying income component has been understated for the past ten years And now it's back It's back And so one of that part of the duet is having the second part of the symphony actually come into play and help a company the theme that is going to be played at this point in time And that's fundamentally what we need to be thinking about portfolio construction You know there's a fundamental change here Tom which is simply that not only are we dealing with financial conditions which are clearly in flux but liquidity conditions which are in flux And that simply means that for an investor there's a few things that they need to keep in mind One transaction costs are higher than their portfolios Two when you think about risk allocations those risk allocations need to be a little bit longer in terms of tenor and also stickier meaning that the cost of those funds actually is more punitive And so we need to be thinking about ways to mitigate the volatility in the portfolios and the cost of these transactions that these transactional costs which means ultimately you need more cash You need more fixed income in the portfolio So while it sounds like we're sort of talking our book when you've seen where we've come from since 2021 with flat yolk curves flat credit curves we actually find ourselves in a pretty defining moment now where the recalibration of frontend rates and rates in general sort of puts that duet back in back into something a little more harmonic right now for people's ears Jerome this duet sounds lovely And I'm sure that it actually is a very great narrative to paint for clients I wonder how much soothing they require after seeing their earnings statements The results after a quarter that was absolutely horrible right A bloodbath for many people in terms of just total losses How much do we get withdrawals from some of these short term bond funds that exacerbate this How much do we get banks reassessing their teams of people and cutting jobs as a result I mean this can't go in a vacuum When you see this magnitude of losses and something supposedly safe Yeah it's a great question Lisa And I think fundamentally when we think about the market and where we've come from and where we are today you can't be dismissive of performance in the first quarter But that's the beta largely That's the recalibration rates And again the level set is very important here We came from a very low rate environment with tight credit spreads and more importantly very relatively flat yield curves People were reaching for income People were reaching for return across all markets throughout 2021 So when the recalibration happened in early 2022 it shouldn't come as a surprise that there is some mark to market losses But this again is where the math comes in and I think investors really should rationalize that starting point So when you think about as an example the beta if you will where fixed income is gone sure bond rates hit bond prices have moved lower rate yields have higher But if you look at sort of the front end the front end as an example here the one year index was down about a hundred basis points 1% bonds move from part in $99 over the course of the first quarter But what we've also done is recalibrate that income and carry component from something of around 50 basis points to something to something closer to 3% And so when you put those two pieces together that puts it in a context of a total return which is actually still positive So while we've had a little bit of short term pain especially across the markets the fixed income market actually still can be rewarded for that second component of total return So that's the part that I think people are going to have to rationalize Now in terms of the broader market Lisa agreed That's something that people are going to have to think about in terms of not only the changing financial conditions that are out there but also the change of opportunity And so the question is is it really time to be a hero per se Well I think you have to think about ways to sort of keep pedaling effectively And to do that until we get clarity on liquidity conditions clarity on where the fed is going and the overwhelming urge is Jerome Palestinian yesterday to continue to fight inflation can create a reasonable amount of volatility for investors in their portfolios for the periods to come And I think that ultimately is the construct of thinking about portfolio management these days is to try to limit volatility and to try to seek out ways to produce returns without adding to volatility and portfolio construction And that's whether you're an institutional investor or a retail investor those premises were really the same from what we've discussed over the past few weeks with our clients Jerome how busy have you been Very That's what I was thinking And the last time you were this busy 2015 and 16 and that was the exact type of market where we had rising interest rates People were a little bit fearful for where the fed was going The transparency wasn't exactly clear what the impact of rate hikes were going to have happened on the market wasn't exactly clear But yet investors were working for looking for a salve They were looking for a way to really immunize their portfolios and allow them to sleep at night How do you claw your way back from a 12% price decline full faith and credit quickly here How do you do that You effectively look at ways to minimize where you want the interest rate curve Look at ways to minimize the interest rate risk and credit risk within portfolios and not necessarily reach Stay high in quality and those are the ways that you can sort of continue that carry to your portfolios I'm trying to catch up as always Good to see you in person too Jeremy and I are there of pimco Futures down 8 tenths of 1% on a S&P and then as that 100 negative by more than one four percentage point and target heading south And then further south down 22.6% in early trading This is Bloomberg Now the latest news from New York City and around the world here's Michael Barr Tom Lisa John.
"melvin capital" Discussed on Bloomberg Radio New York
"As of February $35 billion of value that is in customers pockets literally their smartphone and without Robinhood that may not have been possible especially during such difficult times as the pandemic Now you said you got that call from your clearing house at three 30 in the morning January 28th asking you to put up an extra $3 billion Take me back to that moment and describe how that felt Knowing that you were going to have to make a hard call I think the team played it by the books and I'm proud of how they handled it And of course we look back and we say what are the things we could have done better and I'm sure there's many many things that we could have done better specifically with how we communicated with the decision and the days leading up to it when we were seeing increased volatility But I think as far as the operations team and how they were acting in a moment of very high stress I'm very proud of that team and their professionalism and the way that they had to juggle making the customers that wanted to buy meme stocks happy but also protecting the financial system and our much broader larger customer base You decided to allow selling but not buying of 13 securities including GameStop and you and I spoke on that day And I've never seen so much anger in response to an interview on social media customers were livid they thought you were lying They thought you were in cahoots with hedge funds They thought you were just trying to protect yourself or the company Did you understand that anger or where that was coming from I think a lot of it was based on the false premise of Robinhood colluding with hedge funds or Melvin capital There was even a rumor that The White House had called us told us to shut down trading of this stock So I think there's a lot of misinformation What I wanted to do was dispel the misinformation So when I came to when I came on your show that day and by the way it was obviously it was kind of running on fumes trying to navigate through the day to day of the issue Raising the several $1 billion and obviously it was a very very tricky situation But I would say as angry as people were that we prevented them from buying Had we prevented customers from selling and capturing their gains on the stock people would have been much more angry There would have been riots on the streets and we stopped selling So this idea that you know things would have been better I think it's just categorically false.
Robinhood-GameStop hearing will scrutinize how brokerages get paid for trades
"Game stop hearing on capitol hill stock market versus casino and news from down under leading. Today's news grab the popcorn. Robin hoods vlad. Tentative melvin capitals. Gay plotkin rutted steve. Huffman and citadels kenneth griffin and keith. Gill are also to testify. Before the house financial services committee at twelve pm eastern lawmakers will get their chance to grill the executives and hearing focused on short selling online trading platforms gamification and their systemic impact and our capital markets and retail investors. Also making an appearance is read it trading star known as warring kitty who is credited with helping start the game stop mania though his actions are being pro by massachusetts regulators since he was a registered securities broker an army of day traders following wall street bets the red at forum dedicated to quote making money and being amused while doing it up ended some market dynamics last month by taking aim at some heavily shorted stocks they ran them up as a group triggering short-squeezes and causing some hedge funds like melvin capital to record billions of dollars in losses. The party came to an end after brokerages restricted trading on stocks like game. Stop an amc entertainment. Though robin hood took the most flak due to its communication about the events and delay and taking curbs off of a meme trading
Stimulus prospects could boost the stock market and interest rates in the week ahead
"A four-day trading week we'll see investors tackle the question of how inflation and rising interest rates could come into play this year. Stimulus legislation nears in dc citadel founder ken griffin robinhood ceo and executives from melvin capital are scheduled to testify in a house hearing on the wild market swings in shares of game stop and other heavily shorted stocks
Understanding the GameStop Stock Market Drama
"Markets have been shaken again over the past two weeks as Reddit Day traders boosted shares of companies like game Stop. And sent short selling hedge funds running with long short funds losing 6% overall last month, and Melvin Capital alone, plummeting 53%. But most hedge funds emerged unscathed. And Steve Cohen's 0.72 even attracted $1.5 billion in new money. Here's sweet that Ramachandran, GAM investment manager, I assume hedge funds are probably reluctant to short small cap stocks right now, if the fear that the Reddit brigade might be behind those, But by early this week, game stops to the moon rally started to come back toward Earth, and not even the reddit flash mob or changes the top of the company. Could get the irrational exuberance going again reminding us why hedge funds and short sellers target companies like Gamestop investor that gets caught in the up dressed on that and doesn't understand that investing well, it looks like it's all going up to the person to click the last by understand that that could happen to them that quickly. That's former e trade financial CEO Carl Rossner. I ask Council on foreign relations senior fellow Sebastian Mallaby, if anything will fundamentally change. In the hedge fund world. I don't really, I mean, I think that hedge funds which of course, go back to the sixties, at least have proven to be an amazingly robust platform from which to think creatively about risk. Ondo. They adapt. You know they get new stuff yesterday in their ways when they began, there was no such thing as trading currencies because turned his world fixed it together one mark, it's hardly existed. You have to trade stocks by appointment on. They adapted all the way through that, As everything changed the authentic thea advent of reddit the advent of Robin Hood. This is just the latest iteration of the long, long history of financial innovation, and every time hedge funds figure it out. You also have regulators trying to figure it out as it were, after the fact we have the Treasure Secretary Janet Yellen now saying She's meeting with regulators, saying, We need to take a hard look at this about the volatility and whether this might actually put in jeopardy. Some investors. We also have hearings in Congress coming up. Do you expect there might be some tweaking, at least to the regulations? I think with respect to Robin Hood on the fact that it had to close down Access to trading on second stocks. That's the kind of market interruption which regulators order take action on. You need the infrastructure of trading to be reversed you, you know you need to look at the plumbing, and some regulators put it. And so the back part of the system will definitely because they're fresh. Look, What about on the short selling side? There have been proposals as you know, well for short, so staff to disclose their positions, individual positions, which is done is I understand in Europe. Do you think there might be a renewal of that call? And by the way, why do we have to disclose on the long side and not the short? I'm not sure, Actually, that hedge funds do disclose on the long side unless they buy more than Disposable fresh over believe it's 5% or something off the company so you could get away with a lot without disclosing. I think you know when you Taking a really big position. Probably there's it becomes a systemic threat to you. You know, you might blow up if that position where to go very badly wrong on so regulators to care about the soundness of the system ever all Have a legitimate interests, but I think it's more positions shouldn't have to be disclosed. But we certainly had some large hedge funds who took a big hit on. I wonder whether that did suggest it could be systemic risk here. Well, the beauty of hedge funds is that through their long history They've proven to be smart enough to fail. Not too big to fail, they actually can blow up and people often cite long term capital management in 1998 Aziz. The big exception actually, if you go back and look at that incident The New York Fed convened the banks to recapitalize them, but no taxpayer money. Zero went him. So freestanding hedge funds. I'm not counting here, the subsidiary of best stones that went wrong in a rage. Freestanding hedge funds have never had a taxpayer bailout mills in capital has not needed to taxpayer bailout. That's the good thing about hedge funds.
"melvin capital" Discussed on Bloomberg Radio New York
"Has entered the game and it's probably not going away. That's what Jim Bianco our next guest says. Wall Street never saw their editors coming to me. Uncle is president of Bianco Research on Bloomberg Opinion columnist Jim Just first of all on today's action are the red ITER is sort of retreating just a little bit into their corners in preparation for something else. Big or they just now sort of having executed their plan for Gamestop are they sort of just retreating in general? I think that the retreating from the trade, um, they won. The announcement was yesterday when we found out that the gigantic short in the game stock and some of these other stocks Was covered by the hedge funds. The hedge funds took a big loss. They walked away, and now the short squeeze is ending and so that there are exiting the trade right now. And they're exiting, presumably to big loss. Dave Portnoy text They are sending out a tweet saying he lost $700,000 on the mean stocks Here. This is I mean, the retail investors are getting crushed here, aren't they? No, no, not getting crushed. Are some that are losing Portnoy lost some money. But that's not a big loss for him. He'll be back, You know, probably with a bigger Gaynor lost by the end of the week. If you follow him, like like I do closely Um around of the lot of the buying on all the way up to the top, which we found out now was a short cover. It wasn't necessarily retail. Look, if the answer is there 7.5 million people on reddit that some of those people lose with the market with this not going down. Yes. So if you're asking if the perfection in the trade um no, there isn't. But if you said here's a group of hedge funds, he was a group of retail traders who did better. Retail traders by far did better In this episode, the Masters of the Universe got hurt a lot worse in this trade than the retail traders. Yeah, Tim, How did I not see this coming? I mean, some of them are definitely in there on those red. It's you know, sub bread. It's I was communicating with one. You know, very large hedge fund manager last week and He actually said. It's really shocking. A swarm of small investors overpowering any sense of value this these were his words, How do they not see this coming? I think the problem is the word collusion. Look when the stock out over to 100% of the float. I think it's illegal. It's a short, it's a naked short, but even if it isn't illegal It is very poor risk management by a lot of these hedge funds to have that big a short. Why did they have that big A short because they all looked at each other and let me let me know. Mince words. Is Goldman Sachs going to stick it to us? Is another hedge fund going to stick it to us. Is J. P. Morgan going to stick it to us. No, none of them are going to stick it to us, So it's not imprudent to run that kind of risk. And then they said, who out there is going to figure this out. And stick it to us, and we found out who because if you go in the red aboard, they talked exactly about this. Starting in October, They identified Melvin Capital as being the big short and won the Um Ones when the oil short does report came out by Citron Research two weeks ago, they literally said, this is the This is the event right now. Let's go. We got them because they're at maximum squeeze potential. I think we're Michael Lewis writes the book. He's going to call this Now We've got the greatest trade that's ever been done. So Tim, some of these means stocks if you will, small to mid cap relatively thin. Float big short positions easy to squeeze re surprised to see the reddit traders going to something like a commodity like silver. Yeah, I'm not surprised by that. Um, that doesn't seem to be kind of their modus operandi. I and there is some Debate on Reddit. Whether or not they're actually doing that a swell too. But even if it is silver isn't silver. You know, One of my favorite movies is the hunt for Red October when the top you don't miss the boat. It's just around the ocean. That's the reddit traders looking for another target. So there'll be another chapter to this story. I don't know if it'll be next week or in three months. This crowd is still out there in Leslie. I would say before the last two weeks, we've been seeing this coming. When Buffett solders analyze. It was no less than Dave Portnoy, who led the charge that said, buff, It is only then he's past his prime. Let's all go by the allies. They doubled him must report. I made a ton of money off that trade back then. And the airlines are even higher. They bought the work from Rome stacks that weren't in the index is they bought test flight went up 600% and then got it to the S and s and P 500. They've even been playing the crypto currencies. So they've been largely winning at this Now. I'm not saying they're gonna win forever. What they've been doing is they've been looking at Wall Street's practices, which has a little bit of collusion. This is the kind of way we all do this We've been gaining their system over and over again and taking advantage of it. Wall Street's gonna have to change the way they do money. We're never going to see another big short interest in a stock like this. Again as we move forward because they fear is there now that somebody will stick it to us if we ever do it, Jim, are you concerned on the effect that this will have on Fort salaries and shorts, others making their research available for everybody to view? I mean, in a sense, the short sellers were the little guy for a long time, and they were the people that were ostracized by some in the market, and they were the people that were You know, putting themselves out there, not saying that they were all you know Heroes or Robin Hood's themselves. Let's you know, let's make that very, very clear. But some of them did have excellent research, and they were willing to share it with the world on Bond can't have been all bad. No, I agree. Short Selling is a critical function in the market to the guys like Jim Che knows Barcode is they have been very, very good at identifying literally fraudulent companies and explaining why they've been fraudulent through research reports and profiting off of that. That is a very valuable service. But then there were these smash and grab type of short sellers that kind of gotten away. Like I said, the other institutions didn't put a stop to it until retail did, And now all short sellers have been tarnished, and I think that at the end of the day, that's not a good thing. It is still a valuable function. That was a little overdone that's finally getting pulled back from the frost. But if if the gym chain noses Mark Otis is of the world have to go into hiding now, or witness protection programs Because of this, I don't think in the long run, this is benefits. All of us. Jim, Do you expect any regulatory oversight grow out of this from Washington or the SEC? We've heard some rumblings..
Congress gets involved with GameStop and Robinhood
"Story has been crazy but is it all legal whether it's the flurry of retail traders drug stock prices or the hedge funds and partner companies trying to maintain their dominance wall street is entering some new territory and the rules. Aren't really clear here to explain. Why congress is actually starting to involve is recruits. Ronnie mola sherani. Hey daddy so catch me up on game stop so we talked here on the show about retail traders mobilizing on read. It obviously A key part of the internet to buy hundred game. Stop stock right. And then there's this. Hedge fund called melvin capital but hedge for the general were shorting the stock and they lost all this money. What happened since we last talked about game. Stop so basically robin hood. This commission free app that everyone's been using to buy all these memes stocks like games up. Amc announced that it was actually going to restrict trading on certain stocks including game. Stop rate as all. These people were making a lot of money in the stock price was super high. And as a result everyone got really upset especially these retail investors. A lot of people joined this class action lawsuit saying that robinhood manipulated the market by restricting trades and caused them to lose a lot of money. Sort of this. This platform has become Now being dogged by allegations as it's an tank for one side or another. So why would robin and do this. Why would they yup. They're supposed to just facilitate trades and not care whether game stock goes up or down. Don't they make money on volume so they want more activity. But why would robinhood care if some hedge funds were taking a hit. So i don't think robin hood did care that hedge funds retaining hit. There's a lot of confusion about this but basically it comes down to this plumbing about how the market works and how trades are actually executed that you would never really need to know but essentially because all of these people were investing in these really volatile stocks stocks whose prices go up and down. Robinhood has to keep a certain amount of money. These deposits with clearing houses that are based on how volatile a stock is toronto. Keep some money. Just in case stuff goes race yes essentially and because so. Many people were trading in these really volatile stocks. They had to keep a lot more money. Something like tenfold. What they're used to. And they just didn't have the money for so they actually had to get an infusion of cash rely on a few of their investors to give them a billion plus dollars in order that they could keep letting people trade came out said that we didn't want to stop anyone from trading. Anything this has nothing to do with pets funds or anything. This was just a. We didn't have enough money to clear. These deposits okay so for all the conspiracy theories that have been going on about robin hood somehow being on the take or something like that. You're saying the explanation is actually more boring. It's just has to do with the way that complex financial from his actions like this happened right. And i mean it doesn't help that the way that robin hood makes money is it actually has this other company called citadel securities actually executed trades. And they pay robin hood and they make money because they sell the stocks for a little bit more than they buy them for. They make a few pennies on each trade. And then the guy who owns citadel it all securities also owns a hedge fund called citadel which helps bail out melvin capital which was short and game. Stop okay so there's some associations between between Robin hood and the people who were shorting stock. Yes but they're saying this had nothing to do with the decision they made. That was simply because the deposit requirements for too big sure. Sure okay so now what happens now. I mean so. We're starting to see some action in washington about this. Obviously this politically appealing to a lot of people because you can run against wall street running in silicon valley run against the rich people like. Tell me what we can expect. Obviously there's a lot going on dc but the seems like something that could have some. Bipartisan outrage to it yeah you saw lawmakers on both sides of the tweeting and calling for hearings. There's definitely going to be multiple hearings in congress about what happened. Precisely lawmakers are pretty happy to find any reason to call into question. What's going on wall street. And why a lot of this seems very unfair conservative. Republicans like ted cruz want some answers. Progressive democrats warn zero cossio. Cortez are making a big deal about this. Warren obviously has a background in financial regulation. Tell me tell me what she's thinking. About what congress should do about this just so we get a flavor of the types of things being talked about washington. Yeah she's saying there needs to be an sec investigation. The sec needs to do their job. Make sure there's more transparency in financial markets. Make sure it's not rigged. Make sure there's no manipulation so she's sort of just calling for them to figure out what's going on. Are they doing anything about this yet. So the sec side. It's monitoring the situation. It's also going to look into whether any investors were disadvantaged because they weren't allowed to buy these certain securities It's also important to know the sec's in transition right now. They have an acting chair but they're waiting for their nominee Gary gansler to actually be confirmed. But in the meantime yeah. You're you're just gonna see the sec monitoring the situation. They makes me wonder. How does robin feel about sort of these allegations or conspiracy. Theories robert is now being a little bit more open about what happened and they were in the initial kind of crisis mode. Yeah i mean. They've lifted some of the limits that they had on securities. You could now by game stop again if you buy a shares of amc. They're also going on the sort of like pr offensive. Where they're saying exactly what happened. The they wanna tell you all about clearing houses they want to tell you about the deposits the volatility. You know how how they had to spend so much money this time. So like even the vlad ten of went on clubhouse yesterday with your skin kind of tried to explain exactly what happened. you know. And they're just trying to say this wasn't some sort of giant wall street cabal. This was a really boring thing that had to do with deposit requirements.
"melvin capital" Discussed on 860AM The Answer
"And if you'd read J. D. Vance's hillbilly elegy You would have understood why the game stop. Robin Hood. Wall Street story. Is pure Maga. So what really happened last weekend? Here? I have to give credit to my 21 year old son who's been in Robin Hood. He's been updating me every day on his investments on Robin Hood on what's going on on read it, So I went, I had a competitive advantage. The big boys. Melvin Capital, Citron, the hedge funds sort company, a brick and mortar video game store called Gamestop, and they wanted to crush it because they said that They'll never transform into the Internet age. They won't be able to what Netflix did, so they shorted it. They bet on its stock plummeting. And when the subreddit on that media page that social media app Of young guys of average Americans said. Hey, that's wrong. We love games. Stop! We're gonna buy shares. They pumped up the price of that share. More than 700%. Day event or David's took on Goliath. And they won. On one level. Anybody who loves free market should love this story. But I don't know that. It's about the little guy versus the establishment. On the establishment winning And it that in the establishment Losing to the little guy. That Is exactly why we elected Donald Trump. Represent the forgotten men and women across America. Maga is stronger than ever. It's up to us..
Musk in the Clubhouse, & Retail Traders on the Rise
"Good morning everybody. Welcome the squawk box. Cnbc and i'm becky quick. Along with joe kernan andrew organ andrew. Thanks becky and of course as you might imagine. We are monitoring shares of game. Stop once again. Let's show you where things stand robinhood planning to continue limit trading. In short squeeze names today it's narrowed its list of wounded trades from fifty stocks on friday to eight. Starting today customers will be only allowed to buy one share of game stop or five options contracts. The restrictions coming after wall street's clearinghouse mandated e tenfold increase in robin hood's deposit requirements last week and we should also mention that we're watching shares of or watching watching shares watching the price of silver trading at the highest level since two thousand thirteen. If you've been on read it over the weekend you'll know the red investors say they wanna pile into that commodity and they are doing so the hashtag silver squeeze which trending on twitter last night. That's spilling over into silver mining stocks. So there's lots of impacts across poured meantime sources telling cnbc that hedge fund. Melvin capital management lost fifty. Three percent in january. Melvin capital told us last week that it had closed out those positions in game. Stop on tuesday afternoon after sustaining heavy losses. Those are the losses talking about down. Fifty three percent. Senator and point seventy two infusing close to three billion dollars into melvin capitalist week in a source telling cnbc the point seventy two slid. Ten percent in january citadel lost three percent in january as well and i. I don't know if you guys were up late last night. I was not. But i've tried to listen in this morning to some of it elon. Musk was on clubhouse the social media platform last night. And we're gonna be talking to the ceo of clubhouse a little bit later today. But vlad ten of got on and effectively at of the c. O robinhood wants started affecting we interviewing vlad about what happened he effectively re reaffirmed her reconfirmed. What he told us on squawk box last week but to hear both of them talking about is quite a thing and maybe only speaks to where we are. Twenty four take on. It would seem like what was happening. Was everybody was pushing. On whether sid l. whether there's conflicts whether citadel was pushing on them to somehow closed down because part of the dave portnoy view of the world is because citadel has this arrangement with with them and was losing money themselves that there would be a conflict there where that the regulators are trying to do this or they're trying to protect the small the small guy but in fact that robin hood was trying to protect the big guy. Nice what was really happening there and and plaid stuck relatively to the script. It's appears and again. I have not heard the entirety of it but in terms of what he had said to us last week and very much specifically to the point that clearly this is a liquidity crisis of sorts for this company. The model becomes very complicated. When there's this kind of activity in only a handful of names and that they have to keep putting out bigger and bigger deposits on these names and that if you don't if you don't if you're not a massive bank with a huge balance sheet that becomes very hard. I mean i think it's gonna be very interesting to see what happens this week with robin hood to raise the question but you can make it through this week as an independent company. I think is a fair question to ask. They can keep limiting the trades. They if they limit the trays the flip side. As you'd imagine a lot of these investors will end up on fidelity or tennessee the ameritrade or other platforms. And we'll see exactly so there's sort of push pull that they're going to be grappling. With all week
"melvin capital" Discussed on WBZ NewsRadio 1030
"All three employees from Armstrong ambulance taken to the hospital. Their injuries are said to be minor in nature. A North Dakota family escapes a burning home thanks to their 10 year old daughter. And her cat capacity. Galloway didn't think much when her kittens started stroking her face just after dawn. That is until she smelled what she thought was burnt pizza and went to wake her parents and brother. It turns out that smell was there. Krystal, North Dakota home on Fire, the 10 year old and her family escaped the flames. Just in time. The kitten did not survive least Matteo, CBS News new owner of The New York Mets, says he has dropped Twitter because his family got threats. That he attributes to misinformation that it was not tied to the baseball team. Details from CBS is Matt Pike. It's all over the drama involving Gamestop on Wall Street. That's owner Steve Cohen's hedge fund, 0.72 has become entangled in market turmoil that's pitted a band of small investors against traders that made bets against or shorted stock of companies. Hedge funds that shorted Gamestop have lost billions as small investors bid up the company's shares. One of the short sellers, Melvin Capital, announced this week that it received a $750 million infusion from 7500.72, Cohen says there's been misinformation about it all and will be taking a Twitter break. Back. Piper, CBS NEWS New York Knees Reagan. That means snows on the way you're looking for a more reliable source for winter weather forecasts. The near mother's cousin F. B, It's coming from the West. Right? Neither you found it. Feel it in my head..
"melvin capital" Discussed on NewsRadio KFBK
"One of those subreddit he's called Wall Street bets where amateur investors convened to share investing ideas. And once they caught wind that people were betting against Gamestop. The community took action by betting on games stop this community of online traders and day traders has been trying to defy these hedge funds and bidding. These stocks higher. They've been gathering so many people to do it that they're actually driving the stock prices higher Wall Street, Betts has millions of users so when even a fraction of them start buying stock in a company, the value of those shares go up much to the chagrin of people who now have to buy them back at a much higher price, according to the Wall Street Journal Melvin Capital Management hedge fund that bet against Gamestop. Being bailed out to the tune of $2.75 billion, essentially a proletarian uprising. That's John Biggs, editor in chief of Gizmodo, He says. This all comes at a time when a lot of Americans are feeling economically alienated. We saw the richest people in the world get richer during a pandemic. We sort of course people or even the middle class, fall down multiple runs. So two million people on Wall Street bets can get together and say OK, well, that no longer applies to us. We have big enough group that we're going to come in, and we're going to shock the system. And what's more technology that was once only seen at the big investment firms is now in the hands of everyday people. Lot of the tools that were hidden behind the scenes for a long time. Trading tools lot of the access to information while the understanding of the information in a lot of the analysis tools are are failing on the part of Wall Street and improving on the part of the average user companies like Robin Hood, let you buy and sell stocks says easily is hitting play on a podcast app. And that's not all. Here's Caleb again In the last two years, the big online traders. Basically all online brokers have eliminated commissions for buying stocks. It doesn't cost you anything to trade stocks anymore. Used to cost you Eight bucks or five bucks this week. Robin Hood and others put stringent limitations on transactions related to Gamestop, as well as some of the other ailing companies that have been caught up in the fray like AMC theaters or BlackBerry. Robin Hood says it made the move to cut down on volatility. That has, Caleb explains. Not everyone saw it that way. What a lot of people see this, as is them protecting the hedge funds that bet against these stocks because now that they're going so high The online brokers like a Robin Hood, or T D. A won't let the day traders do what they want to do. Robin Hood lifted those restrictions on Friday. But either way the market is volatile right now, especially when you consider the Wall Street that's community hasn't for the most part, pocketed their money. You gotta sell eventually to realize your games and when enough people start doing that, and enough people start to smell the fact. That the money is starting to leave these stocks that they're going to get a want to get out to. The problem is there aren't that many exit doors when this many people are rushing for them, and when that starts to happen, it's going to be very hard to get those trades executed on the way out, and some folks could be left holding the bag here and lose quite a bit of money. In an apparent effort to discourage users from selling their shares, phrases like hold the line began trending on social media late Thursday, even getting a boost from rapper and Fire Festival organizer job rule. The saga hasn't escaped the attention of Washington, either. Where press secretary Jen Psaki noted the White House is monitoring the situation alongside the Treasury Department and the SEC and that's not all and congressional leaders are also monitoring it because they like to have something to speak about, and I think we'll end up seeing some regulation around trading trading activity that's typically what happens after situations like this game stop, is actually planning to close more than 1000 stores by the end of the fiscal year in March after closing hundreds of locations over the past year. Robin Hood, meanwhile, reportedly weighing its own AIPO sometime this year,.
Melvin Capital, hedge fund that bet against GameStop, lost more than 50% in January
"Order to the Wall Street Journal Hedge fund Melvin Capital lost more than half of its value in January is it carried many of the losses caused by the soaring price and shares of stocks like Gamestop, ABC Deirdre Bolton, says fur traders on acts like Robin Hood Monday. Some restrictions will be in place as of Monday. If you're a new trader in Game stock, and you're on Robin Hood, you will only be able to buy one single share of the company until further notice. Other stocks that have been garnering social media attention, such as AMC, American Airlines, Bed Bath and Beyond and costs. They have the same
"melvin capital" Discussed on WLS-AM 890
"That's promo code. Shapiro. Okay, So, Robin Hood said in a Thursday block post that after the recent volatility, it wasn't allowing the purchase of new stock from Gamestop, AMC, BlackBerry Bed Bath and beyond, Accost Headphones and Nokia as well as naked brands, which may have gotten caught up in the shutdown after Wednesday direct offering campaign But it also raised the margin requirements for some securities, meaning users have to now front more of their own money to buy the securities ostensibly benefiting those with more cash right. So now, instead of being able to borrow money in order by the stock And now they're gonna make you put up your own money in order by the stock. TD Ameritrade and Charles Schwab also increased margin requirements for Gamestop stock on Wednesday. Robin Hood put out a statement. The statement is ridiculous on its face. The Robin Hood statement says that they're trying to protect their users. What from from their users. Like that. That's that's their statement. They said that they were trying to help their customers navigate this uncertainty. Okay, everybody who's buying. It knows exactly what the game is. If you don't know what the game is, you shouldn't be buying in. Everybody knows that. This is basically a giant ass prank in which a bunch of people who got in early on the action gonna make a lot of money and the hedge fund guys gonna pay through the nose. Verge, noted that one hedge fund suffering amid the Gamestop search was Melvin Capital Management. This is where things get really ugly. So one of the things that is suspected here is that Robin Hood basically stopped trading on game stop because One of the big Institutional investors that had shorted Gamestop was Melvin Capital Management. It incurred like $2 billion of losses. It also happens that they are a are a borrower, apparently from another hedge fund called Citadel. The Citadel has has a big share of Melvin Capital Management or some assets under management. Citadels founders Can Griffin, who founded Citadel Securities. Citadel Securities, is a giant investor in Robin Hood. They also work with TD Ameritrade in Charles Schwab. So what it looks like to the to the Suspicious eye is like Citadel was losing money via me via Melvin Capital because they keep bailing out Melvin Capital. And so they went to the other app that they essentially own or are heavy, heavy investors in Hands and they said, you know, it would be great is if you guys could stop it. If you could stop the bleeding that be amazing, and then Robin Hood because they know that their chief investors Were unhappy, decided to completely undercut their central mission and just stop low level traders from engaging in these sorts of plays. That is really, really bad stuff. And probably illegal stuff. It is. It is ugly all the way through. Now several retailers stock brokers brokers, including Robin Hood, said they would allow trades of Gamestop again and other volatile cos. After restricting customer ability of purchase securities. Earlier in the day, they said, we plan to allow limited bison. These securities only limited, though. Actually, I'd like to run the stock price again. We'll continue to monitor the situation and they make adjustments as needed. Robin Hood said Thursday morning would limit buying of the kinds of securities that have sparked an enormous rally in shares of Game Stop the video game retailer at the heart of the frenzy and AMC Entertainment Holdings, the movie theater chain and a number of other companies. The decision, of course, drew fire. As I mentioned a OSI didn't like it, Senator Ted Cruz agreed again. I don't really understand why oes he doesn't like it other than she doesn't like Wall Street and sees an opportunity to bash Wall Street. The reality she doesn't want you to be able to trade in the market doesn't like the markets period. It's the sort of seeing a lot of folks on the left being like, Yeah, Robin Hood needs to allow everybody to trade in the markets. What they're really interested in is the fact that these guys hurt the hedge funds. They're not interested in people being able to trade in the market. If Robin Hood had decided to restrict its users, too. To fewer trade's overall without any of the attempt to take down the hedge funds. I don't think anybody will have to be complaining about that. They're looking for heavy regulation. They're looking for more regulation of the markets, not less regulation of the markets, but welcome to the libertarian Party Comrades. I mean, seriously, come on in, Join the fun. Robin Hood said that it was not favoring the traders. They said that they did all of this because of financial requirements, including SEC net capital obligations and clearing house deposits. They say it was a risk management decision was not made on the direction of the market makers. We route too. Weeble, another trading, APP said customers would only be able to liquidate positions they had in game stop AMC and cost. Before they lifted restrictions in the afternoon. So look like all of a sudden, all of these APS decided all at once that they were going to restrict people from doing what they were doing, which is wild and crazy and dangerous and obviously requires investigation. Senator Mike Lee has pledged that he would like to launch an investigation into all of this. Ugly, ugly stuff. Meanwhile, Google is salvaging Robin Hood's one star rating by the leading nearly 100,000 negative reviews, so people went on to Robin Hood, and they were like, okay, this app sucks because I can't do it. I want Tokyo Google, then delete it all of that. Which is just another way of rigging the market. If the big this falls into the broader category of the big tech bro's they have too much power to shut things down. They do. It is a problem. It is a real problem. That does not mean that government regulation is per se The answer to this That if all of these abs can be leveraged into shutting down the common man Then he's as have way too much power. And unfortunately, as we have seen with parlor when you start building.
"melvin capital" Discussed on KLIF 570 AM
"Because theaters were shut down, right? And they're going to lose $5 this year. So last year was $33 loss this year $5 except they're losing $5 a quarter in the most recent quarter, and, of course, there's almost no revenue. And there's dead. The debt is 400% of capitalization, or it's 400% of equity. It's a E. I mean, bankruptcy is a good option for a company like that, right? Yeah. And There was they raise some capital, which started this back to your point. So it was about 300 million in a convertible unsecured bond. This is a Warren Buffett move on the part of a private equity down. So they loaned him the money with a call option. Of course, they've are with a convertible option. Like like a warrant, like a Warren Buffett warrant. And Of course, they decided to exercise you know there. Yeah. They probably got their warrant at Less than $3. And when I got to 15 of it, they were like, Hey, it's there. So AMC was one of them. If you can't play it like that, then it's probably not worth You know, betting a turnaround. There were a lot of people that called us on J. C. Penney. Ah, and that didn't work. Longer Term. Yeah, There's some people that Had some pretty strong conviction that G. C. Penney would turn it around. And, Yeah, sounds good trading lesson Read. It's Wall Street bets, message boards. That's a new force in trading, okay? Yeah, it is it. Here's Here's the zero hedge article. Okay. Okay. So first casualty of the big short squeeze. Melvin Capital. They've got picture of Melvin right here. Okay. Melvin capitals, Gabe Plotkin. We'll just call him now that he's famous now, uh, in a bad way massive losses on its shorts set to receive a $2.75 billion capital injection. From Citadel, one of the big guys and 10.72 investors. It's a bailout s o. He could pay is margin call. Which okay so alternative investing sometimes doesn't work. Um, and the long short strategy. Think is dead for a long time, because the results weren't that good for the category, right? Um they weren't that good. You know, the high yield index was better. If you take it is a category and now it's proved to be extraordinarily dangerous because you've got a whole group that realizes if a bunch of people bet the stock goes down in short, it Then then, here we go. Um, this is interesting. Neo AMC plug power, Blackberry bed bath and beyond. Papa Dean mentioned bed bath and beyond. He was He was having some fun with this, By the way, was he? Yeah. I don't know how much I don't know how it how he did. We can ask him because he'll be on later in February. Okay? Okay. We don't have to ask him because he's had that for for awhile. Had me Yep. That Z. Well, and he had done. He had done something with options, but I don't want to. Well, I don't know if you want to talk about if he didn't make money at it, Okay, You know, maybe he does. I don't want I don't want to scare him off. Okay? All right. What's next? Michael Burry calls game stop. Unnatural and insane. The rally. Okay, so next economic growth. Let's get to some. Let's let's get to some economic news here. We've got important forecasts, too, so economic growth came in at 4%. Atlanta Fed was wrong, They said. It could be a size 11, but you had the additional shutdowns. Yeah, now. California, New Yorker reopening Well, I think you get first quarter numbers and they're probably 10 or 11. Okay, Well, that's good. Yeah, OK, but that's coming off a pretty weak comp. If I look at last year's Q one and cue to actually mean we're gonna We're gonna get some pretty good numbers, I think. And so that says, first two quarters. Good. Yeah. Okay, So let's get to John Hook on institutional research source. Yeah. Somebody who's a lot of fun and He's been on the program from his Manhattan We'll call it a penthouse. I don't know if it's pretty house or not. But anyway, you get gets a lot of money for his research, and he was spot on on this thing so Um, give us the takeaways, and then we'll take him apart. All right. Dominant force for stocks is likely that the stimulus near record large rally for at least two quarters. Then he says, crash later, probably from inflation, He said. What crash from inflation from inflation? Yeah, it's a bold statement. Well, I'm not email him right now and say OK when Uh, exactly what.
"melvin capital" Discussed on Bloomberg Radio New York
"Shape our world Fred Action to calm concerns over dollar liquidity in curry Beijing. China Data 500 wealthiest people in the world through the eyes of the most influential voices. So Larry Summers, the former Treasury secretary, Starbucks CEO Kevin Johnson SEC chairman. Jay Clayton Bloomberg Bull Street Week with David Western from Bloomberg Radio. Populism hits the financial markets. Is it a fluke? Or does it point to something deeper? Mrs Bloomberg Wall Street Week. I'm David Western, Ah Video Game store is at the heart of a titanic struggle between short sellers and retail investors. Until recently, Gamestop was a company whose time seemed to have passed with serious gamers turning to the Internet, not the mall to get their games. But then social media got involved. Starting a meteoric rise in game stops. Stock After red. It's Wall Street bets forum started pumping the stock to its three million users. The Army of Social Media empowered day traders catapulted the former small caps market value beyond those of even members of the S and P. 500. Here's Bob Prince, the co CEO of Bridgewater Associates. It just reflects the liquid that exists in the new players in the markets. You know, Historically, it's a Negative of a bubble type environment, But you know I could go for a long time. The amateur day traders were targeting short positions held by Gabe Plot Kins, Melvin Capital, and Andrew Left Citrine research. Hedge fund. Titans Ken Griffin and Steve Cohen injected a total of two and three quarters billion dollars in the Melvin capital amid the short squeeze distress. Here's the founder of S three partners. Bob Sloan. What's happening is that the retail right now is stronger. But now short bets, come back and fill in. So it Z just a battle that's going to continue within a matter of days. The Reddit Army had pushed the rally so high that Melvin Capital and citrine threw in the towel on their short positions. I'm just fine. Citron Capital is just fine cover the majority of the short in the nineties at a loss. 100% have a small imaginable position, and I'll let it go that citrine research founder Andrew left the Reddit Army of day. Traders also boosted. Other has bins, including BlackBerry Retailer Express and AMC, which is fighting to stave off bankruptcy. Hedge funds are now on the hunt for other companies that could end up on the Reddit mobs. Radar Here's Dennis Gartman, but this has wider implications for the for the near term. I think this I think you're gonna see a number of hedge funds and declare bankruptcy and start next several days, online brokerages reported service disruptions caused by the retail trading frenzy on a number of them, including Robin Hood. But the rare step of limiting some transactions on shares of game stuff AMC and others You're witnessing the French revolution of finance. Where the problem telly Terry, it is rising up to change the order, structure and finance and they're able to do that because they have Costless data. They have costless trading that Skybridge capital founder Anthony Scaramucci. There's been a surge in overall retail trading activity as people stuck at home. Try their hands at trading, according to Bloomberg Intelligence, Individual investors accounted for almost 20% of the trading volume in 2020, Here's Eileen Burbridge, partner at Passion Capital Investments. The fact that retail investors are gonna be able to communicate with one another that they can actually consolidate their buying power in such a way and provide research data points for these large institutional investors is something I don't think the regulars would've anticipated even three years ago. So what Eyes. The perfect storm that some call Gamestop. We asked Peter Atwater, president of financial Insights, and he said it was something that had been in the works for some time. What we've seen over the past couple of years have been these flash mobs with money as I call them, where investors particularly using social media, get together in Your aim at a single company. You saw this with till ray Beyond me, just one after the other, and what we've started to see is they moved from moving chairs to buying options to now buying options and things that are You know, most shorted and to me. This just reflects on the confidence of the crowd. They've They've gotten much more striking, much more aggressive, and honestly, they've succeeded at it. So so behaviorally. This looks very, very predictable. It's coming to a head at the same time, I was there a reduction of the barriers to entry. If I can put it that way that it's easier for retail traders to get into things like call options, and there was a time that required some sophistication have to go through brokers and things like that. Now. I think you could do it online, can't you Sure, I mean, the technology has moved with the crowd, but I mean, let's let's be honest. This this has been going on for a long time. You go back and you read financial history and they talk about you know, the telegraphs suddenly causing you know the market two more quickly. This is this is the same thing. But in a 2021 version, people are using a accounts online with their iPhones and our trading call options. We've taken it to an extreme. Let's talk about regulation. Because there's various discussion about whether the SEC or someone else should be getting involved. Does this potentially rely afoul of what's going on with the SEC in terms of existing regulations? I don't know if it runs afoul or not. But as a researcher, I have found that regulators When they act react to sentiment. And so I expect that if sentiment becomes too extreme people become concerned about systemic safety. Then you'll see the regulators moving and worse, and you know that that's what they do. They will close the barn doors at the moment that the the animals have already left that they're going to court water on a fire that was already Extinguishing on his own and the question, at least in my mind. I think in many people's minds is due existing regulations really address this I mean, people talked about like, pump and dump certainly their regulations about that. We really talking stop stock up so you can sell it or doesn't need to be Ah, whole new regulatory approach to this, if any, at all. No, I I expect the regulators will respond to this after the fact with with regulations that try to modernize, you know and reflect truly what's in place today, but But I would think about it Almost like servings. Actually. It will come well after the crowd has dispersed. That was Peter Atwater, president of financial insights and.
"melvin capital" Discussed on 790 KABC
"Okay, so, Robin Hood said in the Thursday block post after the recent volatility. It wasn't allowing the purchase of new stock from Gamestop, AMC, BlackBerry Bed Bath and beyond cost Headphones and Nokia as well as naked brands, which may have gotten caught up in the shutdown after Wednesday direct offer in campaign But it also raised the margin requirements for some securities, meaning users have to now front more of their own money to buy the security's a sensibly benefiting those with more cash right. So now, instead of being able to borrow money in order by the stock And now they're gonna make you put up your own money in order by the stock. TD Ameritrade and Charles Schwab also increased margin requirements for Gamestop stock on Wednesday. Robin Hood put out a statement. The statement is ridiculous on its face. The Robin Hood statement says that they're trying to protect their users. What from from their users. Like that. That's that's their statement. They said that they were trying to help their customers navigate this uncertainty. Okay, everybody who's buying. It knows exactly what the game is. If you don't know what the game is, you shouldn't be buying in. Everybody knows that. This is basically a giant ass prank in which a bunch of people who got in early on the action gonna make a lot of money and the hedge fund guys gonna pay through the nose. Verge, noted that one hedge fund suffering amid the Gamestop search was Melvin Capital Management. This is where things get really ugly. So one of the things that is suspected here is that Robin Hood basically stopped trading on on game stop because One of the big Institutional investors that had shorted Gamestop was Melvin Capital Management. It incurred like $2 billion of losses over the past 48 hours. Hey, it also happens that they Are a are a borrower, apparently from another hedge fund called Citadel. So Citadel has has a big share of Melvin Capital Management or some assets under management. Citadels founder is Ken Griffin. Founded Citadel Securities. Citadel Securities, is a giant investor in Robin Hood. They also work with TD Ameritrade in Charles Schwab. So what it looks like to the to the Suspicious eye is like Citadel was losing money via me via Melvin Capital because they keep bailing out Melvin Capital. And so they went to the other app that they essentially own or are heavily heavy Investors in And and they said, you know would be great is if you guys could start if you could stop the bleeding that be amazing, and then Robin Hood because they know that their chief investors We're unhappy, decided to completely undercut their central mission and just stop low level traders from engaging in these sorts of plays. That is really, really bad stuff. And probably illegal stuff. It is. It is ugly all the way through. Now. As of this morning, several retailers stock brokers brokers, including Robin Hood, said they would allow trades of Gamestop again and other volatile cos. After restricting customer ability of purchase securities earlier in the day. Starting tomorrow, they said. We plan to allow limited buys of these securities only limited, though, right? So they're not gonna let you tore up the stock price again. We'll continue to monitor the situation and they make adjustments as needed. Robin Hood said Thursday morning would limit buying of the kinds of securities that have sparked an enormous rally insurance game. Stop the video game retailer at the heart of the frenzy and AMC Entertainment Holdings, the movie theater chain and a number of other companies. The decision, of course, drew fire. As I mentioned a OSI didn't like it, Senator Ted Cruz agreed again. I don't really understand why oes he doesn't like it other than she doesn't like Wall Street and sees an opportunity to bash Wall Street. The reality she doesn't want you to be able to trade in the market doesn't like the markets period. It's the sort of I'm seeing a lot of folks on the left being like, Yeah, Robin Hood needs to allow everybody to trade in the markets. What they're really interested in is the fact that these guys hurt the hedge funds. They're not interested in people being able to trade in the market. If Robin Hood had decided to restrict its users, too. To fewer trade's overall without any of the attempt to take down the hedge funds. I don't think anybody in life to be complaining about that. They're looking for heavy regulation. They're looking for more regulation of the markets, not less regulation of the markets, but welcome to the libertarian Party Comrades. I mean, seriously, come on in, Join the fun. Robin Hood said that it was not favoring big traders. They said that they did all of this because of financial requirements, including SEC net capital obligations and clearing house deposits. They say it was a risk management decision was not made on the direction of the market makers. We route too. Weeble, another trading, APP said customers would only be able to liquidate positions they had in game stop AMC and cost. Before they lifted restrictions in the afternoon. So look like all of a sudden, all of these APS decided all at once that they were going to restrict people from doing what they were doing, which is wild and crazy and dangerous and obviously requires investigation. Senator Mike Lee has pledged that he would like to launch an investigation into all of this. Ugly, ugly stuff. Meanwhile, Google is salvaging Robin has one star rating by the leading nearly 100,000 negative reviews, so people went on to Robin Hood, and they were like, okay, this app sucks. Because I can't do it. I'm gonna do Google, then delete it all of that. Which is just another way of rigging the market. If the big this falls into the broader category of the big tech grows, they have too much power to shut things down. They do. It is a problem. It is a real problem. That does not mean the government regulation is per se The answer to this It does mean.
An Attempt at Breaking Down the GameStop Situation
"I'm the dreams as the Esports minute for me Sports Network. So a lot smarter people than me have explained the situation, but I'm going to give it a pretty short explanation. But please go look for better ones. And first of all, I'm not a financial advisor. I just like the stock. I think most people have seen the meme GameStop stock. Oh absolutely nuclear and value along with some other stocks that had big short positions taken out on them a short Mission put simply is the ability to borrow a stock and sell it with the goal of buying the stock back later with the cost reduce and then returning the borrowed stock. It's effectively a bet on companies a going-out-of-business or at least continuing to decline. That's why the names being thrown out today are companies on the decline GameStop AMC Theaters Nokia Blackberry Etc wage. Some hedge funds would absolutely stupid with these short positions. Sometimes taking out a larger position than actual stocks available. You know classic Wall Street stuff one. Such firm was Melvin Capital took out a massive short position primarily on GameStop, then Wall Street bets erratic Community filled with people from a wide variety of backgrounds. Each independently made the choice to invest in GameStop orchestrating what's known as a short squeeze from there. The stock price goes up as firms like Melvin Capital have to cover their losses by buying more stock and the end result is a staring contest of sorts with both sides trying to out hold the other one. This is again super over simplified, please go search out better explanations of what's going on to the one I'm giving right now. This has been happening over the course of the week. But yesterday on Thursday it became even more complicated when Robin Hood decided to freeze trading Robinhood is an app that brand itself as a place to democratize Trading. Bring in retail Traders and allow everybody to get a little piece of the stock market. They even named themselves Robin Hood after the famous character that stole from the rich to give back to the poor. Well, one of the big backers of Robin Hood is Citadel who's also a backer of Melvin capital and when push came to shove Citadel forced Robin Hood 2008 trades Robin Hood still claimed his allegedly. Allegedly Robin Hood still claims. They did this because of the volatility and to protect their users, but it's pretty clear that out of the stocks all froze at a pretty suspicious time to the point where even and Ted Cruz two completely opposite sides of the American political Spectrum both were calling out Robin Hood and calling us today. She's into it. So there's some shady stuff going on here. But what happened yesterday with people unable to buy it the price started dipping, although not really back to Earth. It didn't crater like one would expect. Free this entire ordeal as I write this with markets closing on Friday afternoon. GameStop is right around $300 a share AMC is around $13 and blackberry is 14000 of those numbers represent massive jumps from where the stock was a few weeks ago, but solid declines from Peaks reached over the last week right now. We are in basically a three-way standoff with hedge funds retail investors and then the giant question mark of government regulations and trading platforms. If Government Regulators decide to step in if trading platforms decide to shut down even more true that's going to have massive impact on what happens here. We really don't know how this is going to play out. And anybody who says they do take them with a grain of salt. I say that as someone who has some am seeing a little bit of gme and some Dogecoin in his portfolio. But still please be careful. Don't invest any money you aren't able to lose also another word of caution. Don't fool. This is entirely a David V Goliath situation here. Wall Street is very smart. And there are a lot of firms not named Melvin capital or Citadel some of those firms were already long on GameStop many others saw what was happening and took out big positions. So while this has often been framed as Wall Street vs. Reddit that's not entirely accurate but for retail investors their choice might actually be a bit of a silver lining because what it means that the deck is not entirely stacked against you plenty of uber rich people have a lot to gain from this short squeeze as well. If it was all about money versus a bunch of people on Reddit. Well, I think history tells us who's going to win that but there's a lot of money on the GameStop side too. So who knows how this is going to play out wage. It's important to recognize that all the billionaires who are tweeting out their support. I'm looking at you Elon Musk and Mark Cuban might not be doing that entirely for altruistic
"melvin capital" Discussed on 77WABC Radio
"The New York attorney general a tissue James finds at the state undercounted nursing home deaths, and this goes back to governor Andrew Cuomo. The other big story is we're continuing to talk about Gamestop, and now some big names got involved. It was a great Twitter battle yesterday, which I watched all of it between the owner of the New York Mets. Steve Cohen. We took a bath in this He got killed and day Portnoy, The man that started bar stool sports and has now raised over $30 million for small businesses. Importantly, went right after Steve Cohen. He said, Listen, man, you should be in prison guys like you were doing this every day. And you know these every day traders. They just want a piece of the pie and you're making it very, very difficult. Robin Hood, by the way, received about a billion dollars a billion. And money's yesterday. So a nice little battle between Steve Come one of the Mets and they import Neue Boy store. Yes, Steve Cohen. He that he's heavily invested in the Melvin Melvin Capital, which went after Ah, game stop, which is again as we talked about yesterday. These hedge funds that's what they do they prey on fledgling businesses. And they're like vultures. Really. They see somebody dying, they swoop in and then they just, you know, they finished him off and then eat the carcass pretty much and they get filthy rich off it. And so these guys on reddit a lot of people who maybe not already who heard about it just joined in on this thing this crusade to stop this, this particular hedge fund Melvin Capital. From taking down game stuff because they had this. They had this sentimental attachment to games. A lot of these. These people, they're young people. Ah, sentimental attachment to get I've shopped in Gabe, stop many temples. Nintendo's X boxes, You know, grant theft Auto, uh, call of duty. I've been there many times a lot of Christmas gifts from Gamestop and these kids. Love it. Now they're adults, and they tried to say that they didn't like They've been doing this for a while, but in particular in game stop in particular struck a chord in them, And that's why they really rallied around game stuff. Steve Coleman actually backed off If you watch the Twitter war against a Portnoy scared him. He did, And they point actually congratulated Steve Cohen for at least continuing the conversation. If the Portnoy really beat his brains in, Yeah, Cohen was pretty tame in his back off back here with Jon Stewart, one of those guys we talked about earlier, who did join Twitter yesterday in defense. Of read it and then a said. That's not enough. One day Williams with method Man Governor Cuomo responsible for about 20,000 more deaths and the continuation of the game stops story. Sicily. Tyson died yesterday. You know, Sydney? They they they say it comes in threes. And in this case, they've been born out. You had Larry King, right? You had Cloris Florist Leachman. And now Mike Tyson's grandmother. Is that right? They related Yes. Are you sure it's not Tyson Chicken? No positive, positive. It's funny. You say that I was saying yesterday they come in threes, by the way, hanker make it for Karen. Yeah, but I was thinking about what's it called Just Cloris. And and Sicily. I for gotten about Larry. So you're right. It has come in three job, baby. Terrible job already forgot about Larry King about him and we got a guy coming in today. Who cried like a baby when Larry died because he was his agent, and that's a good friend of mine and authorized dollars. Bruce Charity, Actually, Larry King's agent, cried like a baby. He's coming in with author Right, Donald later on this morning, so well, yes. Good stories about Larry at the very end. Okay, excited about that. I mean, he cried like a baby like a baby mean. I told her that Hilary's kids even cried like, you know, that's that's why Frank Morano said You don't understand. This guy was crying like a baby. I'm like, really like where I mean, how do how do we know this? Well, he's gonna be sitting here this morning. He's competes. Gonna probably confirm it. Um, I think somebody else saw it. It may have been frank and made an author. I don't know. You look like a man. You gonna yelling over the show? No, no, no, no, no, I'm just sure just trying to be silly. Look, if he had some sort of attachment God bless it was his agent is you cried when Penny Marshall, but not like a baby. You just You should some tears. No, no, I saw the little bit. You know, I was just sorry. I didn't see that. Maybe that was home. Sometimes I go into the corner. And on Lee David Rosie sees it 1 808 48 w A. B C 1 808 48 92 22. So we've got four great guest coming on Today's program, four of them all the stories you want to hear, Lydia reports said. The songs the van, I just figured it out. You did no more commission. That's why he's complaining, baby. That's funny. Maybe some truth to that beat Bernie is coming up a swell welcome to Friday morning. It's me the price you can't save everyone you're going to lose people. That's life. New York Proud. New York Loud with New York attitude all here on talk radio 77 Democrats. Telling you ABC traffic.
"melvin capital" Discussed on KQED Radio
"Exposing the Dark Side of the Personal Finance industry. Elaine, Welcome to the show. Thank you for having me on So this is complicated. But Gamestop went up in stock price this week because a bunch of folks on Reddit decided to do what exactly? This is a as you said, so I slightly complicated story. Essentially, Gamestop, which is one of those companies that turns up on retail expected retail apocalypse lists all the time suddenly became attractive to a group of people hanging around a Reddit board called Wall Street Bets. Uh, add the because short sellers like some of the hedge funds, like a place called Melvin Capital, which I'll get to admit it. We're betting that the stock was going to continue to fall. And these group of people on Reddit, who appeared to be young guys of the type that are usually on Internet boards, decided that game stop was going to go up in price, and they started talking up the price of the stock. And the next thing we all knew the thing had just sort of taken off and over the past couple of days, it has God from opening it about $18 a little over 18 to change the beginning of the year. It closed yesterday at 300, just under $350 in futures trading overnight went up to just under $500, at which point Robin Hood, which is one of the places they are trading this like crazy because it's a free trading platform decided to basically delist Stockhausen's the supporting. We don't know if that's temporary or permanent at this point, by the way, probably temporary. Let's talk about the goal of this. What's the goal here? Was it to make money? Was it to disrupt Wall Street? Was it to prove a point? That's a good question, and it appears to be all of the above. The people on this board clearly want to make money. Everybody wants to big buddy. But at the same time, there seems to be a huge wave of anger towards Wall Street towards baby boomers towards people they see is having buddy and it's very much openly stated that you know we're going to get these Wall Street guys, We're going to make money at their expense. People are talking openly about using their profits to pay off student loads. People are putting stimulus money into this. There's definitely a wave of anger on D. It's worth noting that it appears that this is again you know, young guys millennials young, older Jen's ears. And that economic prospects for this group are nowhere near what the economic prospects were first, say baby boomers at the same age, the amount of net worth they have is much lower the amount of death they have mostly in the form of student debt. But also in the form of card debt. Whatnot is much higher. I'm going to be back with more on the future of Wall Street and the influence.
"melvin capital" Discussed on Newsradio 700 WLW
"If you're my Cleo home to borrow the stock market, it's yesterday was weird. And I had never Seen anything like this rock. I mean, it's not like I don't follow it. Like I said, I've got it. You know, I have my 401 k and all that stuff. But I was like, huh? What's going on? And it was because of Gamestop Gamestop, a company that is by no means a Leading innovative company at this point, it's nothing the stole, you know, it's a store in the mall that your kids go buy video games pretty soon. It's gonna be like blockbuster, right, but because of users on Reddit and some just average Joes who understand the system and all that the stock went up 1700% since January. And there's a lot of implications of all. Let's get our next guest on Nathan back rag, Nathan. I want you to explain this whole situation and explain it to us as if we were all nine years old and shorting a stock. No talking. It's been explained to what several times It's just like I don't even I don't have still don't have an idea of how it works. I'm gonna make this is simply money at its simplest, All right, So using a reddit chatroom, a group of investors and decided we'll call this. The group that have sums decided to go after they have a lot. It sounds like, uh, A nursery rhyme. The Thrones? Yes. So the have a lots are having things their way and have some go. Wait a minute. I see with those guys you're doing and so the guys and it's mostly men. You know who have touted how they can change his game? The system. Well, guess what? Those smart guys, They have a lot Scott gamed. Or maybe we should say they got game Stop. Okay. Melvin Capital on also a guy named Steven A. Cohen If you ever watch billions on Showtime. The whole show is modeled after this guy who is totally reckless. These rich guys decided to short games, Doc, that meant that they made a huge bet when the company was it like 10 Bucks a share. It was going to 00. That would be nice if it was going in the toilet. Right now. What That means is they bought a lot of stock in $10 a share. And then when you sure that you sell it, all right. You only have one obligation. At some point. He got to replace the shares that you bought. Your assumption is I bought him a 10 with somebody asked for him back. It's gonna be a two are giving back the two are pocket the eight day I'm good to go right? That's shorting a stock, however, when the stock goes the other way, because all of a sudden something unexpected happens, such as huge demand. Oh, boy, then the whoever you borrowed those shares from they call you up in ago. Eddie. Rocky, Um, you know, those shares are worth 10 bucks a share. Now they're worth 40 bucks to share. I need this chair's back, and I don't know what it cost you, but good luck. All right, s so this is what happens and it Z. I don't have the simplest way to put it is then the Reddit Group said, OK, We're going to start buying the hell out of this stock and they're gonna hold it there along the position Meaning is supposed to short where they sold the shares. These guys own the shares and they start to create demand for more shares. At which point the price goes up, and the rich guys are getting calls from their bankers going. You realize you're a half a billion. You realize you're a billion. You realize you're a billion and a half. Do you realize you're two billion in the hole and this? And it's being billed, by the way is the democratization Which is the definitely not of simply money word. The democracies. Democratization, meaning there all of a sudden, all the little guys getting Let me tell you something. We'll give you a few facts to chew on when all the dust has settled on this, and it's settling thanks to one of the brokerage firms. I saw that today. Yeah, Here's the deal. 13 million families. There's 119 million family units. No matter how you slice it in America and 13 million of those families control 88, or own 88% of the stock on the New York Stock Exchange. All right, Jesus. So we're having an argument here between the have a lots and they have sums and the meantime, half of the country which would be they have not much is are like I don't know what you're talking about, because I'm just trying to get from Monday to Friday. So thank you. Thank you very much. So the going back to the reading group. They create incredible demand. And they start buying this stuff, and the more they buy the stock. The higher it goes in the higher it goes, the more the guys who made a wager that was going the other way, have got to go in the market and buy the shares because they've got one responsibility. And that's the show up with the shares for whoever they bought him from who was now going. Whoa. You know, I want those shares back and I don't care what it costs. You. And what it cost. Melvin Capital was about $2.5 billion. All right. That was the wager that they lost Steven A. Cohen, who has been in and out of trouble and has had very speckled career, which is why they made the move. The Syriza's Billions kind of after him. His hedge fund this year has lost and it's billions of dollars of his own money is down somewhere between 15 and 17%. All right, so the rich guy's got gamed or game stopped. And the average guy who knows how to play in a reddit room and those how toe do orders Online has done really well. This is not your average person walking down the street going. Listen, Can I buy you a cup of coffee? It's Starbucks and well, radically short some stock. Right happened happened s so Is this not Nathan House? It's not a story of the little guy slaying and basically doing what the hotshot the hedge fund managers have been doing their whole lives. But now the little guy got in our and beat the big guys that I was not what it was. What happened? It's certain Iraqi. Absolutely. It's got a whole lot of that because it but these are little investors. These are small, medium size investors, but they're smart enough to know how to navigate the system. So they did learn the rules. All right, And one of the rules about the money game is it's totally unfair. I'll tell your story. I'm sitting one day when I used to be a regular on CNBC. I'm sitting at the anchor desk and I'm sitting right underneath the closing bell that they bang every morning and every evening, right accident next to a guy who will have to remain nameless and back then. Facebook was coming out and I said, Wow, that's gonna be an interesting idea. He looks to me said you want some? I'll get you some sound more like a drug deal. You want something? I'm good. Get yourself so much. I'll take some. You wanna have a leg? Where do you want And I'm going like, uh and I just and I just sat back for a moment. I thought to myself. Yeah, that's it. That's how it works. So why does Henry Kissinger, the ex secretary of state? Right. How come he got in on Facebook? And so when, when the little guy's band together like this and go after the hedge fund managers, you have to smile and you have to go about time. Every once in a while, I get the Hey, kid, you want them getting pumped? But here's the sad story. There was a guy who invested. I don't know 800 or $150 Million in Game stock stock, and it's up to like $3 billion, All right, and there's a there's a company called, I think Must M ust out of Korea. Hey, on 3.5% of the stock. They sold out their entire position today. Oh, yeah, for $3 billion, so lots of people got out and most of the much of the money got traded between Melvin Capital, and Steven A. Cohen and few others that are yet remain nameless and some other big fat cats..
"melvin capital" Discussed on 77WABC Radio
"Rebecca? Hurry, Say the great Tom Jones. He took a beating yesterday on Gamestop shadows. I really want to know the guys that did I I'm tempted to text Scaramucci this morning, but I don't really want to know. Fine. Well, it was the it was one particular firm. Uh, heads from Melvin Capital. Yeah. So that they were the ones who were in particular targeting. They were targeting Gamestop and they took the beating and again the people on Robin Hood. The day traders the Davids if you will. Prevailed at least yesterday against the Goliath. They had that one big day, so let's see if that can continue. Let's just this is just a great story. I love it. Now it is. I mean, you Really put it out there perfectly. It is David versus Goliath, and David doesn't usually win. So this was great, and it just got together and it's all because most of the people on Reddit again. They are gamers. They're they're you know, my my son is in that genre of of kids. Maybe Matt mean he is, I don't know, not the gamers, but I am on Robin Hood. He's on what He's mean. He's on Robin Hood. My thing with two kids are on. Yeah. What is that? Not only is it commission free, but you don't have to buy entire share. So if you wanted to buy a dot like a dollar of a stock, that was $50. You could do that right? The bias help in at a certain percentage. Yeah, you could buy like, you know, half a stock now. Well, there you have it. Go to Robin Hood today and hop on that wedding message board and get yourself caught up on how folks are making and losing on certain days, millions and billions of dollars another that the cat is a lot of the news is out. All these guys may want to try to cash in today, so the stock market is down 600 points yesterday. It'll get worse. It's already the future's it down. Now, let's see what happens tonight. Take a beating. We got a little comeback. We wear this vaccine story, of course in New York City, that is, I think becoming the biggest story. I mean, we've got the crime and we've got people getting shot every day and this'll respecting cops, and that's kind of like I was getting shot. That goes with the day that the vaccine story, I guess is is the big one because everybody in the city wants to go back to quote unquote. Normal. Whatever that is, I think what that means is Oh, I don't know. Eating inside a restaurant, maybe showing up in Queens and a Mets baseball game, maybe going to a bar or a nightclub on a Friday night, and Governor Andrew Cuomo at least yesterday intimated Bernie that That type of stuff, Maybe right around the corner. Yeah, he did a zoo matter fact. Tomorrow, he's going to make an announcement. Maybe he might dictate our money along with New York City to have 25% people in the restaurant 25% capacity of Maya. Nice guy or what? What's the matter with you The meantime? All those so money? Those guys, We're out of business already. It doesn't matter, Right? And 25% again is a pittance. Why are they being targeted New York City? In particular again, 50% or all around the state. New York City very low. Long Island has the highest positivity rate 50% dining on Cuomo yesterday said something really stupid about incompetence, and it just looked like he said. This with a straight face. I mean, no self awareness to use a term does your Listen to him. We were ambushed like no other state and again, it was from federal incompetence. Incompetent government kills people. Incompetent government kills people. More people died than needed to die in covert. He's right. That's the truth. Well, you did it. Is he kidding, though? I don't know. It's unbelievable. But you know when you when you continue Bernie to go out there and blame somebody else. And you get book deals and Emmy awards and all these things you really start to believe that you are not a part of the problem. I really believe that he thinks he was not part of the problem. I I really believe that he's pays. Pathological is what he is. He's a pathological murderer, Governor Cuomo and by by the way off a thug wannabe, really listen. I mentioned that the Long Island where I live, has the highest positivity rate. I think it's almost 7% the state really relatively doing well. But Long Island again and listen away. He just sort of, you know the way he leans back, and he it sounds like he's threatening Long Island. Listen to him Positivity Long Island 6.8. Long Island, Long Island, Long Island. Ah! All the numbers are down across the state. So then we focus on whose highest obviously Long Island Long Island long what am I going to do with Long Island? What am I gonna What am I supposed to do? A long island, huh? I got a target. These people, right, doesn't it? I got no choice. My my head's a tied down his brother of a house on Long Island Shelter Islander. That's right. Chris Cuomo. Yeah, Fredo has a house out there. That's like shelter Island, as a matter of fact, that particular Yeah, well, yeah. I mean, it's about blue either way, whatever, Long Island So what? 6.8% we've done well. It's all coming down. Just relax. The vaccines. You know they're going to the new supplies are on the way. I think they supposed to get 30% more than was originally anticipated Build. The Blasio told us that yesterday because Joe Biden said a couple of days ago we may not get the help we need until the spring. But the bar's you'll give us a more positive message Yesterday, he did, and Johnson and Johnson the other one shot that's about to come out and also AstraZeneca. You know, really de Blasio made one very good point. Believe it or not yesterday. He said that the president should invoke the Defense production act to force companies like say, merc to make the vaccines that Fizer and Johnson and Johnson are making make make all these companies make the successful vaccines, the ones that aren't doing anything and get the production up and build the blossom of all people said that somebody had to tell him. It's a brilliant idea, but that's what should be done. It's common sense really right. Every single company should be making these vaccines. Buddy, say it, Though. I heard building blocks. He'll say it yesterday. I almost fell off my chair. So now we gotta go back now. He's not the worst player of all time. No, he's now we're gonna miss you May I mean he could climb the Empire State building, grab a plane out of you know out of the sky and successfully bring it down to the ground When nobody hurt he'd still be the worst mayor time. Walter can't argue 1 804 8 w A B c 1 800 848 92 22 Bill O'Reilly stopping by today..
Redditors took on hedge funds over GameStop stock and won. So what now?
"Video game retailer. That's not doing business. Right now just toppled in value on friday. Game stop was worth forty three dollars a share and a bunch of people got together on read it on a message board called wall street bets and they just decided. Let's buy up game. Stop stock and push prices higher and higher now a sheriff game one three hundred and forty seven dollars. Those read it. Based investors made lots of money they have also up ended the entire stock market and bled dry a bunch of hedge funds so much so the white house and treasury now monitoring. What's going on erin. Griffith is also monitoring. What's going on as a reporter for the new york times and she joins me now a aaron. Can you explain. I the origin. There's so there's a reddit thread where people talk about. Trading on wall street stuff called wall street bets is that right right and has about two million users i think and it's not just unrooted. They're also lots of other places on social media where people are gathering talk about stocks. Obviously out there on twitter there on dischord channel which actually shut down today for reasons that are unrelated but the mets people getting together and talking about stocks and it's become extremely popular in the pandemic because While there's no sports the worse there's not a lot of gambling. People are bored and so robin hood which is a stock trading app that has a mission of democratising investing has become extremely popular over the last year. A lot of people are day trading. Now right to robin was. Yeah so basically that. That's where it started right so you can get other robinhood app and thousand dollars or five hundred dollars or you don't have to have some huge amount of money right. You go on this board now. The origin of this as i understand it was it was kind of a troll and it was a troll directed at a bunch of hedge funds had made what's called shorts. They were betting the game stopped. Stock would go down. because it's business looked imperil. does that. is that how it worker started. Yes yes basically A lot of red investors have some kind of vendetta against shortsellers. I'm part of this comes from elon. Musk tesla is one of the most shorted most bet against stocks. And he has. This kind of say is very anti short-selling and So there's kind of manipulation that you can do where if the stock goes way up the short seller's hedge funds that are betting against the company betting on its docks no down. They get squeezed and the higher. The stock goes the more you know. The more the more money they're losing it can become really ugly for them and so they have the the traders know this and they kind of turned it into a game. This is the first time happened before of till ray. Which is a cannabis. Had that happen to them before. But it's definitely the first time it's happened at this scale right so that's interesting. I don't think i that elon. Musk doesn't like shorts. And a lot of people that run companies don't like shorts because what shortsellers do is say we bet on. You're gonna you're doing bad and our selves can drive your stock down. So they go and they look at this stock game. Stop that a lot of wall street hedge funds and said you're in trouble. We're going to bet against you. And they were like we'll take the other side of the bet. We'll rally to rescue the day game. Stop stock and am i right that there's like multiple hedge funds that have now lost billions of dollars on this. I don't know how many have have lost and how much. But there's there's definitely. At least one hedge fund. Melvin capital that had to take a three billion dollar bailout a from a fellow fund over rumors that by the going out of business. They denied that anyone who is short on the stock shorting. A stock is extremely risky. And so anyone who had that position is is definitely hurting right now and tweeted about drawing more attention to it in now all this news coverage the fact that the stock was halted nine times yesterday. The trading was because of so much volatility is drawing more attention to it getting more people sort of rallying in this area absurd mischievous game. So here's what i don't quite get like. At a certain point. I guess this started to get momentum of its own because it doesn't seem like the number of people who've downloaded the robin hood app and are on this reddit. Thread kinnock possibly account for the volume. That is pouring into this stock. Yeah i think. That's a good point. And i think a lot of people are sort of framing like oh this is the little guys rising up against the evil hedge funds and i mean that is worth noting that the hedge funds are also in wall street. Beds there look. They're following this. They're looking at what people are doing. And there are definitely enough people who are day trading on robin to to kind of move. The market share significant are move the market cap significantly of small or thinly traded companies. So big investors are following this now too. I mean you saw a who's very prominent. Silicon valley investor. Tweet that he was following it to i. There's probably some some big money playing in this alongside the read the verdict
GameStop Stock Soars as Reddit Investors Take On Wall Street Bets
"Stop the video game retailer. Stock has rallied over six hundred eighty percent this month and in the last couple of days the stocks volatility has pretty much everyone talking. So what's going on. First of all game stop is for the average mall going consumer dying brand a relic of simpler times when we used to have to physically go to the store and wait in line for the newest call of duty or for the latest harry potter book. So it's no surprise. That game stop has been a target for wall street shortsellers its demise has been foregone conclusion. So short and game stop. That is betting that game stop would continue to. Depreciate could have been a good bet except short-selling is risky and your losses if you lose that bad or basically limitless since there's no cap on how valuable the company has bet against could become so even riskier if stock you've shorted starts going up. You can essentially cut your losses without getting too in the weeds market mechanics here. When a lot of short seller's designed to cut their losses on a shorted stock. That's now suddenly going up it triggers. What's called a short squeeze. Demand goes up. Supply goes down. Price goes up more shortsellers. Try to cut their losses. It's a vicious cycle and one that can result in massive losses for their shortsellers and giant prophets for those who've invested in the stock on the way up which is when a popular reddit. Forum called wall street bets figured out that game stop was the most shorted stock in the us markets. It wasn't hard to convince reddit users in the forum to buy up enough stock in game. Stop to trigger that short squeeze making retail investors of bundle and sticking it to the wall street big guys in the process. This was all encouraged in many ways by high profile investors with a hefty social media presence. Jamaa only petia tweeted that he'd bet on the stock increasing himself cameron winkle voss of the winkle vi- suggested he might go along on the stock and must only tweeted that he was aware of the situation just aware of the situation in game. Stop took off again. In after hours. Trading and to wall street bets credit. The plan worked amid game. Stops rally shortsellers on wall. Street have accumulated over five billion dollars in losses year to date and that includes nine hundred million loss on monday and one point six billion lost on friday. As you're about to hear hedge fund. Melvin capital took an enormous loss on the bet so much so that rumors of bankruptcy were swirling on that wall street. Bet sub reddit. But the founder of melvin told our own andrew ross sorkin. The rumors aren't true. Here's andrew now some breaking news this morning on this game stop story. We've been reporting all morning. Having talked to gay. Plock into runs. Melvin capital gay. Plotkin saying that. Melvin capital has been out closed out its position in the stock force. That company was Firm i should say with short looks like lost a ton of money but short that company up through Before the end of the close yesterday but Gabe saying that They got out yesterday afternoon. Of course the question is what happens now. Game stop a game. Stop shares Melvin capital had to take in an additional close to three billion dollars in new capital citadel. Coming to the rescue along with point seventy two. This is a remarkable saga With game stop so many of these investors no really no longer really investing on the fundamentals of what's happening against up but more just continue to push up the stock and we've seen so many folks like you on musk. Go take to twitter about it. Chihua- polly fanning the flames. So there's a lot of fan fan. Flame fanning taking place right now big questions about regulators where they are what they should be doing a lot of criticism and critique online as saying that if you think manipulation what do you think wall street is doing everyday to us the retail investors so. There's a sort of a pop psychology dynamic at play. And i think we're all we're all learning and try and understand what it means but also what it means in the future for the ability of retail investors to get together on places like read it and other places Form an army of sorts and try to push up The stocks in in certain cases like this. So i'm at a loss for words. Joe i really am where are the regulators and is this just the beginning situation. We all do have a lot to say on this but you you obviously have a lot to san. That's interesting but obviously the plane with the calls. And you're you're seeing calls that are one hundred dollars out of the money going for nineteen dollars and things that you've got markups going from two billion to twenty five billion. Obviously everything you're saying we understand. This is this is a game obviously and these guys. When i put five dollars on a ncaa game that. I don't care that much about that's the same as jemaah putting a couple of hundred grand on some calls or lan or any of the guys were talking about this. I think it's kind of responsible. The kind of laughing about it laughing all the way to the bank. But you know there are market makers that have to take. How'd you like to be short some of these calls. Can you imagine being short some of these calls. Especially if you're not covering i mean you can lose. You can lose ten times your money. Unlike a regular investment where only lose one hundred percent. I mean this this this makes this makes bitcoin look like t-bills if you think there's speculation and crypto when you when you look at something like and now they're looking for the next mark right they'll find another game stop once they're done with game stop but in the meantime there's gonna be blood all over understand why i understand why elon musk is doing it. He hates the shorts. They've you know he's right. Thinks it's a game where he's playing a game to understand he's playing the game too. I don't understand why tomatoes doing this. I don't understand why the winkle loss guys doing this. I mean this is i. It's nothing about me. Said too much money it and if you if you think people look unkindly at the wealthy at this point like wait till you see what happens with with the retail investor who gets sucked into thing and gets caught in the trap with who can't afford to lose the money like these guys are doing. I'll tell you the thing there. There really is a merry band of retail investors. Out there both already but increasingly and this is what i think even more concerning i spent a lotta time night reporting this out but also spending time on the in some of these rooms there are places people are going out into encrypted rooms onto telegram onto signal where they where they effectively are planning their next raid. Where they're trying to look to say. Okay where can we do. You know who can we take down next. In this case it was capital that they were seeking to take down. That's why i think the news today that they're out maybe potentially a turning point. I don't know. I don't. I don't know what turns this stock back into some kind of a normal
"melvin capital" Discussed on Bloomberg Radio New York
"Bloomberg 11, 30 to Washington, D. C. Bloomberg 99. 12 Boston Bloomberg, one of 61. This in Francisco Bloomberg 9 16 to the country, Sirius XM, gentle 1, 19. And around the Globe, The Bloomberg Business Hat and Bloomberg radio dot com. This is Bloomberg Markets. This half hour. We're going to take it with Kathy Burton Bloomberg Hedge fund reporter on Reddit traitors of bludgeoning Melvin Capital and Warning to Wall Street on Danielle DiMartino booth of Quill Intelligence will give us a preview of what we should expect from the FOMC decision and news conference. Now let's get a Bloomberg business flash from Greg Harris. Money. The S and P is headed to its biggest decline in three weeks after cutting its losses by about half earlier that speculation the Fed will make a dovish comments and news conference later this afternoon. Take a look at the numbers right now. The S and P is down. 1.5% down 56. The Dow's down over 1% down 333 and the NASDAQ is down one of the quarter percent down 171. The 10 year is up. 7 30 seconds. The yield 1.1% West Texas Intermediate crude oil is up 1% of 53 12 of Barrel comics. Gold's down a quarter of represented 18 50 60 announce. Valerie in 10406, the euro dollar 2099, the British found a dollar 37 03. It's the day traders versus the short sellers. Short sellers are getting the dirty end of the stick game stops. Brief taking a set showed no sign of slowing today. Now up nearly 150% on the day. That's a Bloomberg business Flash on Gregory. This is Bloomberg Markets with Paul Sweeney and Bunny Quinn on Bloomberg Radio. Gamestop Touchy roll AMC Entertainment. One of these three names all have in common besides trading higher High short interest and they are getting moved higher in a significant short squeeze that we haven't seen in some time. Some has got to be losing money. On the other end of that trade. It turns out some of the big hedge funds on Wall Street are in that camp to bring us a story. Kathy Burton, Hedge fund reporter for Bloomberg News, joins us here, Kathy, who is Melvin Capital? What is Melvin Capital and what's their role in what's happening in some of these names? S O. Melvin Capital is a firm run by gate. Plotkin. He was very, very successful trader who came out of work with Steve Cohen for almost a decade. And he has been sort of the center of the whole battle between we called the red it grows and the professionals For some reason. About a few months ago, they started targeting Gates portfolio and they were shorting. Today We're going along a lot of the stocks he was shorting, including In shop. Yeah. I mean, Cathy, why gave in particular you know, he's easy. He's a young guy. He's very successful. There are many people out there that have had a lot more attention in the media and other places that might have Drawn the ire of Reddit Bro's sort of more obviously on yet, didn't they might have drawn the ire of other market participants, but not the red Oppose what gives with Gabe? I mean, he's very successful and He had the backing of as you say, as a C capital. He even got people to help shore up the hedge fund, most recently when it was under attack. Yes. So no one really knows for sure. But it seems that unlike a lot of hedge funds Gabe. Didn't use over the counter puts when he was shorting some stocks. And so if you looked in his regulatory filings, you could see that he had puts on certain companies. And so it was in republic what he was doing. And so that's the only explanation that anyone could really come up with, for why he became a target and also because he's a pretty known to be a pretty Aggressive short sellers, so hey, had some pretty chunky positions. What's the status of movement capital right now, Kathy I think that the infusion of capital um um Steve Collins 0.72 from 10 prisons. Surgical has helped. The firm has really shorted up. It seems that they covered We know they've covered game shop and they've we dig the portfolio a bunch so It seems like they're they're in an okay position. Although we did hear that through yesterday, they had their losses. Head increase 20% that we reported. Yeah, I mean, it live in a free Friday difficult couple of quarters for Milton Capital. Any idea what his other positions are what his lungs might be? No, we don't really have. Ah, A lot of insight. Leo the last filing, Lee, huh? Um, it's from the third quarter. So that's quite a little while ago and these guys don't change around the portfolios. Any other hedge funds that have been kind of targeted or do we know that maybe have had some You know, poor performance as a result of kind of what we're seeing in some of these names. Uh, nowhere. We're hunting or center of that right now. We haven't heard. Um ah lot of names, although he suspect that Have definitely be people that at the end, the month got got hurt. Any. I mean, I'm just throwing out this and you know I don't want to be Wild in my theorizing. But is there any anyone out there saying that perhaps there's an army of reddit ER is that air actually sort of market participants that are regular market participants, but that are sort of stoking the fires in the flames in readies itself. Um No one knows for sure, although it does sort of make sense that there could be people..