GME and AMC stock action (out of main)

[OrthoSurg]

I’m planning to buy more GME Monday if there is a dip. One way or another, the shorts have to cover eventually. The only way out is if they play their illegal, manipulative games well enough to avoid the squeeze (possible) or GME does a large stock offering to let them off the hook while giving the company a massive cash cushion (possible).

I just read the theory about the hedge funds that have shorted more stock than the actual float and covering their shorts with fake shares and now retail investors owning 100% of the stock. They think the underlying situation is bigger than what they expected. I don’t know what to think about this but they saw it would explain the reason for the high number shares failed to delivery.

 

[Nocturnal]

Saw a great post on WSB where somebody who made a bunch from GME bought a crapload of Nintendo Switch consoles and donated them to kids in need. Excellent idea. I can tick some of my charity dollars off my list, boost my Nintendo stock, AND give the finger to the shorts.

I just ordered 4 Nintendo switch lite consoles and 4 games to donate to my local children’s hospital.

 

[Nocturnal]

Wow, this is exactly the post I was searching
I didn’t feel like ready wallstreetbets for 1 hour

I bought 115 shares at 74 Tuesday, sold at 120 in the evening
Bought 50 shares at 270 Wednesday and sold at 370 Thursday

was hesitating in throwing the 10k of House money Monday to support till the short squeeze. Might do it after I read your post.

who is buying GME Monday?

That’s kind of what I was doing. In and out and did well. Unfortunately when IBKR broke down last week I couldn’t sell shares so sold my options instead. Feb 19th $115 so probably screwed myself out of a bunch of money.

Holding a bunch of amc calls now and a small amount of gme shares. I think I’ll buy more Monday with some of my gains. To support the cause and take more short money.

 

[Silentk]

From Ihor / S3:

“An early peek into our algo reveals a significant decline in GameStop shares shorted, as short sellers trim and liquidate their holdings. Moreover, S3 data reveals that trading in the latter part of the last week gave short sellers exit points below GME’s high water mark levels and reduced their mark-to-market losses. A portion of Friday’s gains can be attributed to short sellers buying-to-cover shoulder-to-shoulder with long shareholder buying.

It doesn’t look like there will be a pause in GameStop’s stock price volatility, as both the long and short side should remain active. The short side may be covering at the moment, but they can turn on a dime and resume short-selling as stock loan availability from previous short covers hits the market. If long-side buying turns into profit-taking, new short sellers may jump back into the fray and help push GME stock prices down.”

 

[jhm]

I may have resolved my query about issuing new shares.

Answer, GameStop does not need to issue new shares! Please, challenge my thinking below.

As of 10/31/2020, GameStop reported 65.2 million shares outstanding.
Currently, my broker reports that GameStop has 69.7 million shares outstanding.
Typical stock based compensation is around 1.5 million shares per quarter.

It looks like the company may have sold 3.0 to 4.5 million shares out of treasury, depending on how much SBC was distributed.

How much stock might GameStop have in treasury? It reported 106.7 million shares outstanding in 2015 and 102.1 million as recently as 2018. Thus, GameStop may have over 37 million shares in treasury.

At $325/share, GameStop could pull in as much as $12B selling 37 million in treasury shares. To put this into perspective, as of 10/31/2020, GameStop reported a mere $1.155B in total debt and $0.332B in equity. Treasury shares totally dwarfs the balance sheet!

Please, critique. I don't want to be wrong on this.

According to the last 10-K, repurchased shares were expired immediately. So the decline in outstanding shares is not indicative of shares held in treasury. The 10-K did not report the number of shares in treasury. Basically, I have no ideas how many shares are held in treasury.

Oh, well.

 

[AperiodicCoder]

I bought in Thursday morning right before Robinhood tanked the price.

Loading dry powder to buy more Monday.

 

[Nocturnal]

I thought the Fool was run by smart people? Their thesis is that the GME contracts will all be exercised. Yeah that’s dumb. Robinhood automatically sells options if you don’t have the cash on hand which almost nobody will. Other brokers do the same, and that’s if the holders are too stupid to sell themselves.

The Worst Mistake GameStop Investors Can Make Right Now | The Motley Fool

 

[Big Earl]

Saw a great post on WSB where somebody who made a bunch from GME bought a crapload of Nintendo Switch consoles and donated them to kids in need. Excellent idea. I can tick some of my charity dollars off my list, boost my Nintendo stock, AND give the finger to the shorts.

I just ordered 4 Nintendo switch lite consoles and 4 games to donate to my local children’s hospital.

I hope you ordered them from GameStop!

 

[Nocturnal]

I hope you ordered them from GameStop!

Yes! I forgot to add that.

 

[jhm]

Should GameStop Help the Shorts and Issue More Stock?

This article contains a pointer to a law that may limit company selling stock to short-sellers. It's not a deep take however.

 

[OrthoSurg]

I thought the Fool was run by smart people? Their thesis is that the GME contracts will all be exercised. Yeah that’s dumb. Robinhood automatically sells options if you don’t have the cash on hand which almost nobody will. Other brokers do the same, and that’s if the holders are too stupid to sell themselves.

The Worst Mistake GameStop Investors Can Make Right Now | The Motley Fool

Are they spreading FUD to serve the hedge funds?

 

[Nocturnal]

Are they spreading FUD to serve the hedge funds?

You never know but either way that article really seems to have a motive.

 

[generalenthu]

Should GameStop Help the Shorts and Issue More Stock?

This article contains a pointer to a law that may limit company selling stock to short-sellers. It's not a deep take however.

I can't find the link but there was an opinion that SEC has indirectly warned GME regarding issuing shares into the squeeze. SECs language can be found here:
Game Back On: GameStop Stock Rebounds As SEC Warns Against Market Manipulation

But what matters is the interpretation. SEC obviously doesn't say that directly. There's a precedent though when Hertz was not allowed to sell shares into a mania a few months ago. Ultimately I think they had to reorganize under BK.

Edit: Hertz was clearly not going to be a going concern, but GME very well is.

 

[Nocturnal]

I can't find the link but there was an opinion that SEC has indirectly warned GME regarding issuing shares into the squeeze. SECs language can be found here:
Game Back On: GameStop Stock Rebounds As SEC Warns Against Market Manipulation

But what matters is the interpretation. SEC obviously doesn't say that directly. There's a precedent though when Hertz was not allowed to sell shares into a mania a few months ago. Ultimately I think they had to reorganize under BK.

Edit: Hertz was clearly not going to be a going concern, but GME very well is.

I had been concerned about an offering but that seems to be off the table. I guess I need to buy a little more tomorrow morning.

 

[Boomer19]

So according to wsj Melvin covered its positions. So back to normal on Monday ?

What about the silver target ?

Bullion Dealers Face Sudden Shortage As Reddit-Raiders Take Aim At Silver | ZeroHedge

zero hedge is to outing HFTs as chanos was to enron. aside from that...rag

that said. wouldnt be opposed to see silver at whatever realistic value it is, more or less. after years of manipulation and slaps on the wrist.

 

[Electroman]

OMG! What a horrible article! Paywalled, of course, so I'll just paste some choice excerpts. And no, I'm not cherry picking. The whole article is atrocious.

"Financial markets are usually stabilized by rational investors: If the crazies drive stocks to an absurd height, thoughtful people take the other side of the trade until prices reconnect with reality. The correction can be late and messy — it’s hard to be thoughtful when markets are wild — but at least our culture generally applauds the partisans of rationality. After the subprime bubble popped, the plucky minority that called out the excess became minor folk heroes. There was even a movie about them.

So far, this time is different. The GameStop speculators are not merely in a frenzy about one stock. Their goal is to destroy the traders who link stock prices to fair value. To suggest a political analogy, they are not just blindly devoted to their candidate; they deny the legitimacy of the opposition party. They are not just acting within the system; they want to overthrow the system. It’s as though — just imagine — a rabble gripped by conspiracy theories were to attack the rules of democracy itself."

[Actually no, the goal was to make money off the hedge funds. What a re-writing of history. Also, hyperbole much?]

"a hedge fund is a small-to-medium-size company that makes money by choosing smart investments. There is nothing nefarious about this."

[Other than they are leveraged 30-1 and can destabilize the financial system]

"What about short sellers? These are specialists who research stocks that might go down, sometimes because bosses are illegally covering up bad news about their companies. When short sellers identify a case of fraud or similar, they borrow and sell the stock, hoping to buy it back at a lower price later. Again, there is nothing evil about this. To the contrary, it’s a way of keeping prices honest. A market without short sellers is like a political system without investigative journalists."

[Wow, so much integrity! They would never lie about the companies they are trying to destroy, like Tesla, right?]

"The worry is that the GameStoppers will now target others. Short sellers operate in the open: You can check short-selling volumes for any given stock on Yahoo. By whipping up frenzied buying of a heavily shorted company, speculators can cost the shorts billions and maybe put them out of business."

[That's the worry? That hedge funds might be put out of business? Not that legit companies like Tesla, SolarCity and Gamestop could be put out of business???]

"Already, GameStoppers are buying other beaten-down companies, such as cinema giant AMC."

[The horror!]

"Hedge funders and short sellers are out to get rich: They are certainly not angels. But there is a difference between trading based on evidence and research and trading based on conspiracy theories and mob tactics. Over the past week, it’s been tempting to celebrate the colorful rebels — they represent the democratization of finance, the revenge against the fat cats. Now it is time to remember that truth matters."

[OMG! The mob! We wouldn't want the mob to get rich, only hedge funds are allowed to do that! If I hadn't looked into this idiot's bio, I might have thought this was a troll or a parody. Nope, this guy has written BOOKS glowingly praising hedge funds. Excuse me, I need to sit down while my nausea passes.]

I was able to get around the paywall by downloading the article using the 'curl' command on a command prompt.

curl -v url >> story.html ; story.html

Couldn't read the comments though.

 

[jhm]

I can't find the link but there was an opinion that SEC has indirectly warned GME regarding issuing shares into the squeeze. SECs language can be found here:
Game Back On: GameStop Stock Rebounds As SEC Warns Against Market Manipulation

But what matters is the interpretation. SEC obviously doesn't say that directly. There's a precedent though when Hertz was not allowed to sell shares into a mania a few months ago. Ultimately I think they had to reorganize under BK.

Edit: Hertz was clearly not going to be a going concern, but GME very well is.

Hmm, that warning seems pretty generic. I wonder if GameStop could get the blessing of SEC to issue new shares. It would be a move to reduce market volatility and to protect shareholders against a post-squeeze price crash.

Indeed, the borrow rate for GME is still way up, 50%. So shorts are still piling on in anticipation of a crash, even as longs pile on in hopes of a moon landing. How exactly is the SEC to diffuse such a situation? It seems to me the most elegant solution is for GameStop to issue more shares, which would limit both upside and downside to the squeeze.

GameStop short sellers are still not surrendering despite nearly $20 billion in losses this month

Thanks for your reply!

 

[jhm]

Biden Aides Say Market Oversight of GameStop Frenzy Is Working

This article provides some color on how the SEC is looking at the situation. The priority is on making sure the "plumbing" works. So the attention seems to be more on the exchanges and platforms rather on the price volatility per se. If retail investors are getting shut out of the market by the like of Robinhood, that's a big problem.

 

[Cosmacelf]

I was able to get around the paywall by downloading the article using the 'curl' command on a command prompt.

curl -v url >> story.html ; story.html

Couldn't read the comments though.

I have a browser (Firefox) that I only use for such paywalls - I've configured Firefox to turn off Javascript, and voila, I can read articles like that now.

 

[Cosmacelf]

Biden Aides Say Market Oversight of GameStop Frenzy Is Working

This article provides some color on how the SEC is looking at the situation. The priority is on making sure the "plumbing" works. So the attention seems to be more on the exchanges and platforms rather on the price volatility per se. If retail investors are getting shut out of the market by the like of Robinhood, that's a big problem.

Color me skeptical until I see what they do. This quote:

Brian Deese, the head of Biden’s National Economic Council, said last week’s stock swings are “appropriately being investigated” by the SEC with a “real focus on protecting retail investors and the integrity of the market.”

Could be read two ways. One way would be to "protect" retail investors by limiting what they can so the poor dears can't hurt themselves (or the market). Regardless, I somehow doubt the hedge funds are going to see more restrictions. I hope I'm wrong.